The Ghanaian Cedi at the start of the week posted a mixed performance against its three major trading partner currencies on both the Bank of Ghana (BoG) inter-banking trading platform and on the Open Forex Market (oanda.com). The Cedi’s performance comes after the consumer price index recorded its first dip after three months of tightening following a weakened Cedi as well as upward adjustment in the prices of petroleum products at the pumps. According to the Ghana Statistical Services, the inflation rate for May came in at 9.4%, dropping from a six-month high. The Cedi recovered part of its losses against the British Pound Sterling but failed to post any gains against the US Dollar as it further extended its losing streak against the Dollar to ten weeks in a row.
Following a move by both Ghana and Ivory Coast to set a minimum price at which the two countries are willing to sell cocoa beans to buyers, it is expected that Ghana’s forex earnings from the sale of cocoa will receive a massive boost. Last week Ghana and Ivory Coast which together produces more than 60% of the world’s cocoa beans agreed with buyers of cocoa beans to set a floor price at USD 2,600 for the sale of cocoa. The two-day meeting which was attended by traders, manufacturers, processors, among other users of cocoa was to address the overly fall in the prices of cocoa. The move triggered a 1.4% jump to USD 2,540 in the price of September cocoa forward contract on the day of the meeting. This strategy, if held successfully is expected to have a positive impact on the balance of payments of the two countries.
On the BoG inter-bank trading platform, the Cedi depreciated by 0.47% to begin the week at GHC 5.2525 from previous week’s trade value of GHC 5.2280. The Cedi lost to the Dollar after improved US retail sales data for May eased concerns of a slowing US economy. The upbeat data also pushed back expectations of a US rate cut at the Fed’s June sitting. Against the Pound and the Euro, the Cedi ended weeks of losses against the Pound and the Euro. It appreciated by 0.51% and 0.23% to trade at GHC 6.6003 and GHC 5.9000 at the start of the week from previous week’s trade values of GHC 6.6343 and GHC 5.9135 against the Pound and the Euro respectively.
On the Open Forex Market (oanda.com), the Cedi posted a similar mixed performance as it lost 0.53% to the Dollar to begin the week at GHC 5.4079 against GHC 5.3794 posted the previous week. The Cedi, however, appreciated by 0.43% and GHC 0.26% to begin the week at GHC 6.8001 and GHC 6.0689 from previous week’s trading value of GHC 6.8297 and GHC 6.0846 against the Pound and the Euro respectively. The Pound lost against a host of trading pairs including the Cedi on worries that arch-Brexit campaigner, Boris Johnson, is set to replace out-going UK Prime Minister, Theresa May, following reports that he leads rivals in the race to replace May. Concerns about the impact of a hard Brexit on the UK economy sent the Pound tumbling against many trading pairs as investors feared that May’s successor may lead the UK to hard break off from the European Union.
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 5.2525 [June 17th, 2019] indicating an 8.77% 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 5.4079 [June 17th, 2019], representing a 10.86% year-to-date depreciation of the Cedi against the US Dollar.