The Ghanaian cedi has lost more than 27% of its value against the U.S. dollar this year. But this decline might slow down because the U.S. Federal Reserve plans to cut interest rates on September 18, which could make the dollar weaker. This may help the cedi recover.
In August 2024, Ghana opened its Royal Ghana Gold Refinery. This refinery will process 400 kilograms of gold each day from small local miners. This will help Ghana make more money.
After the refinery started and Ghana saw a 2.39% drop in inflation, the cedi got stronger in August. Earlier that month, the cedi had dropped to 16 GHS.
People think the U.S. Federal Reserve will cut rates by up to 50 basis points on September 18, 2024. If this happens, the dollar might get weaker, which could help the cedi get even stronger, just like it did in August.
Things to Know
- Ghana’s cedi is starting to get better. Positive news in August, like a drop in inflation and the opening of the gold refinery, is helping the cedi.
- The refinery is a partnership between Rosy Royal Minerals of India and Ghana’s central bank. Ghana owns 80% of it.
- The refinery can process 400 kg of gold each day. This is expected to increase Ghana’s income, especially after a poor cocoa season in 2024. This good news is helping investors feel positive about Ghana and its currency.
- A U.S. Federal Reserve rate cut makes borrowing cheaper for businesses and people in America. This often makes investors look for better returns elsewhere, which can weaken the dollar.
- If the dollar gets weaker, currencies like the cedi, which are paired with the dollar, could get stronger, making up for earlier losses.
USD/GHS Trend
- Similar to Nigeria’s naira, the cedi has been losing value against the dollar for several years. This loss became significant in 2016.
- The depreciation sped up in February 2022. By November 2022, the cedi had fallen by 132%, reaching 14.40 GHS.
- In December 2022, the cedi’s value improved to 9.98 GHS but then kept declining, hitting 16 GHS in the first week of August 2024.
- Economic good news in August, like dropping inflation and the refinery’s opening, helped stop the cedi’s seven-month losing streak in 2024.
- If the U.S. Federal Reserve cuts rates and the dollar weakens, the cedi could get stronger again, making up for earlier declines.
