The Cedi depreciated at a much faster pace of 5.9 per cent in January 2012 compared to 1.9 per cent in January 2011 mainly on account of strong demand for foreign exchange and certain speculative activities.
The Governor of the Bank of Ghana (BoG), Paa Kwesi Amissah Arthur, delivering the Monetary Policy Committee (MPC) report for the last quarter of 2011 and its impact on current developments on Wednesday in Accra, said the cedi depreciated by 4.9 per cent against the US dollar in 2011, compared to 3.1 per cent in 2010.
“In trade-weighted terms, a real effective depreciation of 1.7 per cent was recorded, compared to 1.5 per cent in 2010.
According to him, the rapid growth in imports in 2011 and the unusual surge in demand for foreign exchange during the last quarter of the year created a misalignment in Bank of Ghana’s foreign exchange cash flow.
“Initially, this led to a marginal depreciation in the interbank rate as banks searched for resources to meet their customers’ requirements.