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Currency News For April 1st, 2019

The Ghanaian Cedi began the second quarter of the year posting a mixed performance against its three major trading partner currencies on the Bank of Ghana (BoG) inter-bank trading platform. The Cedi’s mixed performance at the start of the week comes at a time when the Monetary Policy Committee (MPC) of the BoG stayed the policy rate at 16% on the back of risks to the inflationary outlook. The committee, however, noted that “overcoming these risks would require vigilance and time consistent policy actions.” The MPC also warned of a monetary policy tightening in the event that economic developments experience a downturn. On the Open Forex Market (oanda.com), the Cedi after an impressive performance posted last week gave up some of its gains to begin the week depreciating against all three major trading partner currencies.

According to data released by the BoG, Ghana’s Gross International Reserves (GIR) rose significantly from USD 7.0 billion (equivalent to 3.6 months of import cover) as at the close of last year to USD 9.9 billion (5.0 months of import cover) at the end of the first quarter of 2019. The jump came mainly on the heels of the recent USD 3.0 billion Eurobond proceeds. The well-funded GIR gives an indication that the central bank is well positioned to auction enough forex to shore up the supply of Dollars to meet demand pressures. At the conclusion of the 87th MPC meeting, the Governor of the Bank of Ghana stated that an improved trade surplus was recorded in the first quarter of the year which should further strengthen Ghana’s GIR going forward. He indicated that a trade surplus of USD 899.0 million (representing 1.3% of GDP) was recorded in the first quarter of 2019 against a trade surplus of USD 724.5 million (1.1% of GDP) recorded same period last year.

On the BoG inter-bank trading platform, the Cedi lost to the US Dollar depreciating by 0.11%, week-on-week, to begin the week at GHC 5.0884 from previous week’s trade figure of GHC 5.0830. Against the British Pound Sterling and the Euro, the Cedi built on previous week’s impressive recovery as it gained 0.79% and 0.85% respectively. The Cedi traded at GHC 6.6724 and GHC 5.7102 at the start of the week from previous week’s trade values of GHC 6.7258 and GHC 5.7589 against the Pound and the Euro respectively. The Pound struggled against many currencies after UK MPs voted down for the third time UK Prime Minister’s withdrawal deal from the European Union, plunging the UK into even more political uncertainty. Fears of Britain leaving the EU without a trade deal weighed on the Pound as it fell against a host of currencies.

On the Open Forex Market (oanda.com), the Cedi erased parts of previous week’s resilient performance as it depreciated by 4.63%, 3.75% and 3.84%, week-on-week, against the Dollar, the Pound and the Euro respectively. It began the week trading at GHC 5.3482, GHC 6.9974, and GHC 6.0033 from previous week’s trading values of GHC 5.1113, GHC 6.7448, and GHC 5.7814 against the Dollar, the Pound, and the Euro respectively. The greenback rose against the Cedi despite a cut to the US economic growth estimates in the fourth quarter of 2018 coupled with a drop in US retail sales data for February.

According to the Bank of Ghana inter-bank rates, the Ghanaian Cedi began 2019 at GHC 4.8291 [January 2nd, 2019] against the US Dollar and is currently selling at GHC 5.0884 [April 1st, 2019] indicating a 5.37% year-to-date depreciation. Similarly, on the Open Forex Market (oanda.com), the Ghanaian Cedi traded at GHC 4.8780 [January 2nd, 2019] and is currently trading at GHC 5.3482 [April 1st, 2019], representing a 9.64% year-to-date depreciation of the Cedi against the US Dollar.

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