Cedi extends three-week rally as GoldBod dollar supply boosts liquidity

The Ghana cedi has been steadily appreciating against the US dollar for over three weeks, with traders crediting the improvement to increased foreign exchange liquidity. This shift marks a stark contrast to earlier this year, when the local currency faced persistent depreciation. Market observers attribute the earlier downturn to surges in dollar demand to fund imports prior to the holiday season.

During a recent meeting with international investors in Bangkok, Bank of Ghana Governor Dr Johnson Asiama highlighted this pressure, particularly pointing to substantial payments in the energy sector. He assured investors that the central bank was collaborating with GoldBod to bolster foreign exchange liquidity, bolster reserves, and maintain stability.

Traders and bank officials have identified GoldBod's expanded dollar supply as a key driver behind the cedi's recent gains, noting that the pricing was also instrumental in depressing exchange rates. GoldBod's Tuesday spot sale, conducted on its GoFX platform, saw the sale of US$130 million, slightly below the prevailing spot rate, which is expected to be part of a larger supply exceeding US$500 million this month.

This influx of dollars is anticipated to sustain cedi stability if the trend continues. GoldBod plans to generate roughly US$1.5 billion from foreign exchange receipts, with US$1 billion earmarked for sale to commercial banks and US$500 million directed towards the Bank of Ghana to bolster reserves. The framework, which will see GoldBod conducting sales on Tuesdays and Thursdays, aims to provide commercial banks with transparent and equitable access to US dollars through the GoFX platform.