Courage Martey, Senior Economic and Currency Analyst, has described the cedi’s problem as idiosyncratic, while noting that the Ghana cedi is suffering from lack of Eurobond inflows as it has come under serious selling pressures in recent days.

The currency analyst explained that market participants are not confident about the market outlook. He is therefore, calling for new ways to cushion the country’s foreign reserves.

“The cedi’s problem is idiosyncratic because of the fixation of regular Eurobond inflow’s which is now missing today. And the kind of the withdrawal symptom from the Eurobond market is really squeezing the cedi hard and the market is really not comfortable with the level of reserves [Ghana’s foreign reserves] they are seeing.

“In recent weeks or so, you’d also agree that there has been negative noise around the level of reserves that we have. And that also plays into the psychology of the market in a negative way and the cedi is really under serious selling pressure.”
Courage Martey

Mr Martey insisted that, despite the approval of the $750 million syndicated loan by Parliament yesterday, the outlook of the foreign exchange market is not encouraging.

“The good news is that parliament approved some $750 million, out of the $1.0 billion. However, the understanding is that it doesn’t fully resolve our total external financing means for the year [2022] and so the market doesn’t have that full confidence that the supply side or the gap between demand and supply is fully met with this approval.”
Courage Martey

Mr Martey argued that there is limited supply without options to beef up the reserve right now and is really playing negatively on the minds of investors who are really taking cover in safe haven currencies like the US dollar and are selling the Cedis for the dollar.

Meanwhile, the Bank of Ghana has disclosed that the local currency has depreciated by about 18.89 per cent to the dollar on the interbank market and 26 per cent on the retail market in the second quarter.

The cedi is presently trading between GH¢8.30 and GH¢8.35 on the interbank market.

Depreciation of the Cedi Worsening the Country’s Debt Situation

The depreciation of the cedi has worsened the country’s debt stock. Latest data released by the Bank of Ghana puts Ghana’s total public debt stock as at June 2022, at USS 54.4 billion or GH¢393.4 billion.

In Dollar terms, the debt dropped by about $4 billion in the first 6 months of the year, from $58.6. billion in December 2021 to $54.4 billion at half year, 2022.

In Cedi terms however, the total debt stock within the first 6 months of this year, increased by about GHC41 billion.

Per the data from the Central Bank’s Summary of Economic and Financial Data report, for July 2022, an additional 41.6 billion Ghana cedis has pushed Ghana’s public debt stock to GH¢393.4 billion as of June 2022.

The June 2022 debt figure brings Ghana’s debt to gross domestic product, GDP ratio to 78.3%, using an estimated GDP for 2022 of about 502 billion Ghana cedis.