The Minister of Finance, Dr. Mohammed Amin Adam, has said the Cedi has been largely stabilised since early 2023 against the major trading currencies.
According to him, the cedi cumulatively depreciated against the US Dollar by 27.8% at the end of December 2023 down from the depreciation rate of 30.0% at the end of December 2022 and 50% at the end November 2022.
Speaking at the Ministry’s monthly briefing in Accra yesterday, Dr. Adam indicated that from February to December 2023, the Cedi’s depreciation against the US Dollar was only by 9.1% as compared to 29.8% over the same period in 2022.
He explained that this means the Cedi is showing significant stabilisation over the last 11 months of 2023.
“The high depreciation of the Cedi against the US Dollar in January 2023 (20.6%) was largely on the back of realignment of the foreign exchange market between the official and the forex market,” the Minister stated.
“The Cedi’s stability has continued into 2024, with a cumulative depreciation of 6.8% as at 20th March 2024, compared to 22.1% recorded in the same period in 2023.
“We encourage the Bank of Ghana to continue with its intervention to sustain the stability of the currency,” he asserted.
“However, the exchange rate has witnessed some pressures in the last few weeks due mainly to the strengthening of the US Dollar against major trading currencies,” he noted.
He explained that payments made for energy and corporate sectors, compounded by the delays with the disbursement of the 2nd tranche of the cocoa loan and the World Bank DPO, have placed further pressures on the cedi.
“According to the Bank of Ghana, these pressures have been mitigated somewhat by the continued inflows from remittances and mining companies, and from the domestic gold purchase programme,” the Minister stated.
“Price pressures have eased significantly in response to ongoing fiscal consolidation, appropriate tightening of monetary policy, and relative stability in the exchange rate and the relatively good food production.
The Minister said headline inflation (year-on-year) declined by 30.9 points to 23.2% in December 2023 from 54.1% in December 2022 before picking up slightly to 23.5% in January 2024.
“Inflation resumed its downward trend, thereby easing to 23.2% in February 2024. 23. Month-on month inflation for February 2024 eased at 1.6% down from the 2.0% recorded for January 2024, largely on the back of non-food inflation at 1.3% compared to food inflation of 2.0% for February 2024,” he stated.
According to him, more specifically, food inflation dropped to 27.0% in February 2024 from 27.1% in January 2024; 28.7% in December 2023 after peaking at 59.7% in December 2022.
For non-food inflation, the Minister indicated that it declined to 20.0% in February 2024 from 20.5% in January 2024, and 18.7% in December 2023, after peaking at 49.9% in December 2022.
“Inflation for locally produced items increased slightly to 24.6% in February 2024 from 24.2% in January 2024 and 23.8% in December 2023 after peaking at 51.1% in December 2022.
“Inflation for imported items dropped to 20.1% in February from 22.0% in January 2024 and 21.9% in December 2023 after peaking at 61.9% in December 2022,” he added.
He continued that the current exercise to rebase the CPI basket will provide an opportunity to report inflation that reflects more current developments.
By Ernest Kofi Adu