Governor of the Bank of Ghana, Ernest Addison
Governor of the Bank of Ghana (BoG) has disagreed with assertions that the rate of the depreciation of the cedis against the major trading currencies especially the dollar, has been high this year.
Contrary to this claim that the rate of depreciation is high, he said, the rate has been lower this year compared to previous years.
Answering questions during the Monetary Policy Committee (MPC) press in Accra on Monday, Dr Addison said “I don’t think I agree with you that the depreciation has been higher this year.
“If you look at this year, it is much lower than last year.
“Last year by now we had 3 per cent, so really depreciation has been much lower this year. Obviously, you might say that as the economy is beginning to recover there will be more demand for foreign exchange but I don’t think that it should be represented as in its entirety to the outlook for the cedi.”
Cedi continues to show remarkable strength against major currencies, especially the US Dollar, the latest report released by Bank of Ghana indicates.
According to the latest Monetary Policy Report by the Bank of Ghana, the Cedi has shown a cumulative year-to-date depreciation of 1.7 percent for 2021.
With this impressive depreciation rate, the Central Bank, and, indeed, analysts project that the Cedi is likely to end the year 2021 with the lowest rate of depreciation since 1992 and in the Fourth Republic.
The Cedi has shown stability in the past few years, bouncing back from its highest annual depreciation rate of 31 percent in 2014.
While the Cedi depreciated at 12.9 percent in 2019, it came down to 3.9 percent in 2020, and with three months to end 2021, the 1.7 percent 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 percent in the second quarter of 2021, from the 3.1 percent recorded in the first quarter, and a 5.7 percent 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 percent as at end-August. Profitability levels of the banks remain high, with profit growth driven by increased income growth.