Global pressures weigh on cedi as US dollar strengthens – BoG

The Bank of Ghana (BoG) says tighter global financial conditions and a stronger US dollar are putting pressure on emerging market currencies, including the Ghanaian cedi.

Governor of the Bank of Ghana, Dr Johnson Asiama, said the developments are being driven largely by heightened global uncertainty and the ongoing conflict in the Middle East.

Speaking at the opening of the 132nd Monetary Policy Committee meeting, Dr Asiama said the conflict has disrupted trade flows and pushed up energy prices, creating additional risks for global growth and inflation.

According to him, Brent crude, which was above $85 per barrel at the previous MPC meeting in July, had risen to about $107 per barrel as of last week.

He said the increase in oil prices is occurring against a backdrop of depleted global inventories, leaving markets with less capacity to absorb further supply shocks.

Dr Asiama noted that several central banks that had started easing their monetary policies have since paused or reversed course, while markets are anticipating higher US interest rates.

"Tighter global financial conditions and a stronger US dollar, these have also weighed on emerging market currencies, including the cedi,” he said.

The Governor said the global developments are also creating risks for Ghana’s inflation outlook, as higher energy and agricultural input prices contribute to rising global headline inflation.

He said global growth forecasts have also been downgraded, with the World Bank and United Nations now projecting global growth at 2.5%, below the IMF’s April estimate of 3.1%.

The developments come as the Bank of Ghana assesses the impact of external pressures on Ghana’s economy and considers the appropriate monetary policy response at its 132nd MPC meeting.

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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.