16th July 2024

Figures available in the latest Monetary Policy Report released by the Bank of Ghana (BoG) show that Ghanaian Cedi continues to show remarkable strength against major currencies, especially the US Dollar.

According to the report, the Cedi has shown a cumulative year-to-date depreciation of 1.7% for 2021.

Based on impressive depreciation rate, the BoG as well as analysts project that the Cedi is likely to end the year 2021 with the lowest rate of depreciation since 1992 and in the 4th Republic.

The Cedi has shown stability in the past few years, bouncing back from its highest annual depreciation rate of 31% in 2014.

While the Cedi depreciated at 12.9% in 2019, it came down to 3.9% in 2020, and with three months to end 2021, the 1.7% is the lowest depreciation in nearly three decades.

The Monetary Policy Report from the Bank of Ghana also indicated improved performances in some key sectors of the economy while other sectors are still yet to recover from the dampening effects of the COVID-19.

The report showed a stronger pick up in annual GDP growth to 3.9% in the second quarter of 2021, from the 3.1% recorded in the first quarter, and a 5.7% contraction in the same period of 2020.

The report also indicated a positive outlook in the banking sector, which remains stronger and well-capitalized, with stronger growth in total assets, investments and deposits. Total assets increased by 16.7% as at end-August. Profitability levels of the banks remain high, with profit growth driven by increased income growth.

Policy rate maintained

The central bank on Monday announced that it had maintained the policy rate at 13.5 percent for the third consecutive time this year.

The BoG Governor, Dr Ernest Addison, underscored the need to keep the policy rate unchanged due to developments in both the local and global economies.

“The Committee noted that the recovery in global economic activity has continued, although unevenly spread across regions and countries. But, uncertainties regarding the continued spread of the Delta variant of the COVID-19 virus, variations in policy stimulus programmes, and low access to vaccines in emerging market and frontier economies may weaken near-term growth prospects,” he said.

“Global inflationary pressures are expected to be strong in the near term. However, the factors driving headline inflation are judged to be temporary. The still sizeable spare capacity in the global economy and the slackness in labour market conditions would restrain wage growth and prevent a significant and sustained pick-up in underlying inflation. Inflation is expected to return to their target over the medium-term as the spare capacity is eroded,” he added.

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