The Ghana cedi has shown signs of stabilization against the US dollar after depreciating by 24.3% from the beginning of the year to September 25, 2024. According to Governor Ernest Addison, this stability is largely due to the tight monetary policy stance and improved forex liquidity support.
In the second half of the year, the cedi’s depreciation slowed to 7.1%. This positive trend is expected to continue, driven by improved global economic activity, private and government spending, and declining oil prices.
Ghana’s domestic economy is also recovering, with a stronger-than-expected GDP outturn for the second quarter. The external payment position has improved, characterized by a higher trade surplus and strong reserves build-up, thanks to robust gold exports and external financial inflows from the IMF and World Bank.
The Monetary Policy Committee (MPC) has taken note of these improvements, lowering the policy rate from 29% to 27%. Headline inflation has eased, declining by 5.4 percentage points over five consecutive months, while core inflation has dropped by 6.9 percentage points.
Forecasts indicate that inflation will continue to ease towards the target range of 13-17% for the year and eventually reach the medium-term target of 6-10% by 2025. With these positive trends, the MPC considers the risks to the inflation outlook as fairly balanced .
As Ghana looks ahead to the end of the year, the balance of payments is projected to achieve a surplus, driven by increased exports, stronger remittance growth, and lower government external payments. The Ghana cedi is expected to end 2024 at GH¢13.4 ± 0.10 to one US dollar, influenced by expected inflows from multilateral sources.
Ruth Abla ADJORLOLO
