The latest Monetary Policy Report from the Bank of Ghana (BoG) indicates that exchange rate volatility in May 2024 led to a decline in both business and consumer confidence.
The report highlights that fluctuations in the exchange rate were the primary challenge for businesses during this period.
The Business Confidence Index fell to 88.8 in May from 92.6 in the previous period, reflecting concerns over the cost implications of the significant depreciation of the cedi.
In May, the cedi depreciated by 14.6% against the US dollar, trading at GH¢15 per dollar on the retail market. It also lost 14.5% against the Pound, with a rate of GH¢17, and depreciated by 12.9% against the Euro, trading at GH¢15.
The Consumer Confidence Index also saw a decline, dropping to 81.2 in June from 87.7 in April. This decrease is attributed to high food prices and uncertainties regarding future economic conditions.
The report notes that besides exchange rate fluctuations, factors such as erratic power supply have also contributed to increased operational costs for businesses, which are likely to impact consumers.
Despite these challenges, the data suggests that Ghana’s economy remains resilient and is on a path to recovery.
Finance Minister Dr. Mohammed Amin-Adam has stated that the government is working to mitigate the depreciation pressures on the cedi and enhance the business environment to support better business operations.
