Exchange rate volatility in May 2024 led to a drop in business and consumer confidence. This is according to the Bank of Ghana’s (BoG) latest Monetary Policy Report.

In simple terms, the biggest challenge that had a toll on businesses in May was the blips in the exchange rate.

The Business Confidence Index dipped to 88.8 from 92.6 in the same comparative period as businesses expressed concern about the cost implications of the rapid exchange rate depreciation observed in May 2024. 

In May, the cedi had depreciated by 14.6% against the US dollar; being quoted at GH¢ 15 to a dollar at the time on the retail market.  Against the Pound, the cedi had depreciated by 14.5% trading at GH¢17.

The local currency had also lost 12.9% in value to the Euro selling at GH¢15 at the time.

The Bank of Ghana report also showed that the Consumer Confidence Index declined to 81.2 in June 2024, from 87.7 in April 2024, on account of high food prices and some uncertainties about future economic conditions. 

Not only are these marginal shifts attributed to the exchange rate volatilities but also a variety of factors, including erratic power supply, which have collectively increased operational costs for businesses.

As these costs get passed down the line, consumers will soon take a hit.

While there may be bumps in the road ahead, the data suggests that Ghana’s economy is resilient and on the path to recovery.

Meanwhile, Finance Minister, Dr. Mohammed Amin-Adam says the government is working to slow down the depreciation pressures on the cedi and improve the business climate for better business operations.