The Ghanaian cedi came under pressure after racking up a whopping loss of 22.44% against the US dollar. This comes despite the attempt by Ghana’s central bank to hike interest rates to offset shortfalls caused by global tensions in Europe.
The US Federal Reserve increased its benchmark interest rate by three-quarters of a percentage point to battle inflationary pressures. The rate increases result in a higher dollar relative to the majority of other currencies, including Ghana’s cedi.
As a result, at a time when many emerging market (EM) economies are already failing and their currencies have already dropped against the dollar, a stronger US dollar supported by higher US interest rates tends to lower the value of emerging market currencies.
Nonetheless, the conflict between Russia and Ukraine is expected to have a substantial impact on Ghana’s exchange rate, particularly in the construction, agriculture, and international trade sectors.
