The cedi depreciated to as much as 16 percent against the dollar after offshore holders of domestic debt failed to roll back their maturing investments at the same time as when the BoG was building reserves to meet targets under an IMF bailout programme.
The cedi started recovering and as at Thursday, the Ghanaian currency was trading at 5.2513 against the dollar in Accra.
In an interview with Bloomberg Television, Dr Addison said “we think that is probably where the fundamentals would say it should be. The key thing to recognise is that the exchange rate will reflect the fundamentals of the Ghanaian economy, and we believe that the fundamentals are at the appropriate places.”
After President Akufo-Addo came into power in 2017, Ghana’s economic growth has been positive even as the country prepared to finalize a four-year IMF bailout program, which ended earlier this month. Over the same period, the central bank cut interest rates by 950 basis points as consumer-price growth eased to within the target band of 6 percent to 10 percent.
According to Dr Addison, a surprise cut in January was due to the U.S. Federal Reserve’s “more accommodative” stance, giving the Bank of Ghana “room to reduce the policy rate at home.”
Further easing will hinge on the Monetary Policy Committee’s expectations for price growth, Addison said. “We are very cognizant of the need to stay focused on inflation.”
Ghana can’t “remain competitive having inflation rates of 8 percent when our trade partners have lower inflation of about 5 percent,” he said. That “creates problems for currency stability,” he said.