Seasonal forex demand, payment to contractors and speculation putting pressure on the cedi – Finance Minister

Finance Minister, Mohammed Amin Adam

The Minister of Finance, Mohammed Amin Adam has explained why there is pressure on the Ghanaian cedi, resulting in recent depreciation of the local currency.

Addressing the media on Friday, May 24, the Finance Minister said seasonal forex demand, payment to contractors, and speculations are affecting the cedi.

“The recent pressures we are observing on the cedi is largely on the back of the strengthening of the US Dollar against major trading currencies, seasonal forex demand including elevated demand from corporate institutions, payment to contractors and to IPPs, high Cedi liquidity, and speculation,” Finance Minister Mohammed Amin Adam said.

Due to the recent pressure on the local currency, $1 is trading around GHS15 on the forex market.

Despite the concern raised by the business community, the Finance Minister insists that the cedi is still strong.

“The Cedi’s stability has continued into 2024 with a cumulative depreciation of 14.2% [from January] as of May 20, compared to 20.7% recorded in the same period in 2023.

“People may see the cedi depreciating fast recently, but if you compare the rate of depreciation this year which has been 14.2% from January to May to that of the same period last year, this year’s rate is better. So on that comparative note, we are safe to conclude that the cedi is still strong. It is very strong," Mohammed Amin Adam noted.

The Finance Minister also indicated that the cedi is expected to stabilise to improve into the medium term as the country completes debt restructuring, makes more progress on fiscal consolidation, and improves its reserves over the medium-term.