The Bank of Ghana’s (BoG) latest Monetary Policy Report reveals that exchange rate volatility in May 2024 significantly impacted business and consumer confidence.
According to the report, fluctuations in the exchange rate were the primary challenge for businesses during that period.
The Business Confidence Index dropped to 88.8 from 92.6 as businesses expressed concerns about the rising costs caused by the rapid depreciation of the cedi in May. The local currency had depreciated by 14.6% against the US dollar, trading at GH¢15 per dollar on the retail market. Against the British pound, the cedi had fallen by 14.5%, reaching GH¢17, and it had also lost 12.9% of its value against the euro, selling at GH¢15.
Additionally, the Consumer Confidence Index declined to 81.2 in June 2024, down from 87.7 in April, due to high food prices and uncertainties about future economic conditions.
Beyond the exchange rate issues, other factors, such as erratic power supply, have increased operational costs for businesses, which are expected to be passed on to consumers.
Despite these challenges, the BoG report indicates that Ghana’s economy remains resilient and is on a path to recovery. Finance Minister Dr. Mohammed Amin-Adam has assured the public that the government is working to ease the depreciation of the cedi and improve the overall business climate to support better operations.
