BY ISSAH OLEGOR
The Ghanaian cedi is facing renewed pressure against the United States dollar, with the local currency recording its second monthly depreciation since May as rising demand for foreign exchange, particularly to finance imports, weighs on the exchange rate.
Market data and price quotations from several commercial banks indicate that the cedi depreciated by 1.86% against the dollar in July, reversing part of the gains recorded in June when the currency appreciated by 3.30%.
The June appreciation was largely linked to increased foreign exchange support from the Bank of Ghana, which injected approximately US$2.01 billion into the market to meet dollar demand and support stability in the foreign exchange market.
However, the pressure returned in July as demand for US dollars increased, particularly from businesses and importers requiring foreign exchange to finance energy-related imports.
The renewed weakness has continued into August, with market data showing that the cedi recorded week-to-date depreciation of 0.52% and month-to-date depreciation of 1.66%. On a year-to-date basis, the local currency has depreciated by 8.06%, reflecting the continued pressure on the foreign exchange market.
Christmas imports increase demand for dollars
One of the latest factors contributing to the renewed pressure is increased demand for dollars from businesses preparing for the December Christmas shopping season.
Market watchers have indicated that importers are beginning to position themselves ahead of the festive period, increasing their need for foreign currency to pay overseas suppliers and bring goods into the country.
The seasonal increase in import activity could therefore keep demand for dollars elevated in the coming months, particularly as businesses seek to secure stocks ahead of the traditionally busy Christmas trading period.
The pressure is also being compounded by movements in crude oil prices, which affect the amount of foreign exchange required to finance Ghana’s energy imports.
When the cost of crude oil and other petroleum-related products rises, importers require more dollars to settle their international obligations. This can place additional pressure on the foreign exchange market, particularly when dollar demand grows faster than available supply.
BoG expects relative stability
Despite the recent depreciation, the Bank of Ghana has described the latest movements as normal developments within the foreign exchange market and maintains that the cedi is expected to remain relatively stable for the remainder of 2026.
In its July Monetary Policy Report, the central bank acknowledged that renewed foreign exchange demand ahead of the Christmas season could create additional pressure on the local currency.
However, the Bank expressed confidence in its ability to manage the pressures through foreign exchange interventions and other market-support measures.
