High demand for foreign exchange partly responsible for cedi depreciation – BoG
Increased demand for foreign exchange, coupled with the normalization of the United States monetary policy, are factors responsible for depreciation of the Ghana cedi, Governor of the Bank of Ghana, Dr. Ernest Addison has asserted.
According to Dr. Addison, the domestic currency market was pressurized by the continuous demand for foreign exchange by corporate and energy-related sectors, consequently leading to the depreciation of the cedi.
Dr. Addison added that a combination of factors such as rising US yield rates and the normalization of US monetary policy has led to the strengthening of the US dollar, resulting in tight financing conditions and reverse capital flows within the Ghanaian market.
He made this known during a Monetary Press Committee meeting at the conference room of the Bank of Ghana on Monday, July 23, 2018 to announce the new policy rate for commercial banks.
The Monetary Press Committee was set up to review the health of the economy.
The committee also assessed the impact of major economic policies introduced by the central bank to stabilize the economy.
On top of the agenda were issues such as the depreciation of the cedi, the marginal increase in inflation, impact of rising interest rates in the US market and its impact on emerging markets like Ghana.
The Ghana Cedi has recently undergone a high appreciable fall in value against other major international currencies with the US Dollar in perspective.