Demand for forex from the energy sector has gone up. That’s expected, since international crude oil prices have risen in recent weeks due to the ongoing US-Iran tensions.
It now costs more to buy the same amount of imported oil, which has put pressure on the cedi in the forex market and led to some exaggeration about the cedi’s weakness.
However, market sentiment doesn’t suggest any need for panic. The central bank has also explained the situation.
At the 130th Monetary Policy Press Briefing, Governor Dr. Johnson Asiama said the Bank has enough currency buffers to meet market demand, so the pressure on the cedi is temporary.
He attributed the seasonal demand to dividend payments and higher demand from the energy sector. He urged calm and said the Bank is in a strong position to prevent excessive volatility.
The Governor also stressed that the cedi’s movement is an endogenous variable. Appreciation or depreciation is normal, but excessive volatility is what the Bank watches closely.
So far, the cedi has shown strength. It appreciated by more than 40% last year and remains resilient, despite some pressure in recent weeks.
