Currency News For September 16th, 2019

A rush for safe-haven assets and currencies following global uncertainties fuelled by attacks on Saudi Arabian refining facilities sent the Cedi tumbling against some of its major trading partner currencies. The Ghanaian Cedi at the start of the week posted a mixed performance against the US Dollar, the British Pound Sterling and the Euro on both the Bank of Ghana (BoG) inter-bank trading platform and on the Open Forex Market (oanda.com). It remained under pressure as it extended its weekly losing streak to the seventh consecutive time on the BoG inter-bank trading platform. Against the Pound, it fell to a more than 2 months low as at the close of last week but gained momentum to recover part of previous weeks’ losses against the Euro as markets assess the impact of extended monetary stimulus in the Eurozone area.

The Cedi’s performance this week comes ahead of a Monetary Policy Committee (MPC) meeting to review the health of Ghana’s economy to enable the central bank to position the policy rate going forward. It is anticipated that the MPC will stall the policy at 16.0% as inflation is expected to inch up going into the last quarter of the year buoyed by growth in private consumption, slow pace of fiscal consolidation and a sustained mild depreciation of the local currency. Data after the conclusion of the MPC meeting will, however, provide a guide on Ghana’s Gross International Reserves (GIR) which might give indication of the BoG’s readiness to support the Cedi if the Cedi’s depreciation continues. Inflows from COCOBOD’s syndicated loan facility is expected to further strengthen the GIR which may further give the BoG the necessary footing to auction forex to support the local currency.

On the BoG inter-bank trading platform, the Cedi lost 0.08% and 0.58% to trade at GHC 5.3097 and GHC 6.5957 at the start of the week from previous week’s trade values of GHC 5.3057 and GHC 6.5578 against the Dollar and the Pound respectively. The greenback further added onto previous week’s gains against the Cedi as robust US consumer prices and retail sales data pointed to a moderate pace of economic growth. Better than expected US consumer and producer price inflation data boosted confidence in the Dollar despite expectations of a rate cut in September. Against the Euro, the Cedi gained 0.45% to recover part of previous week’s 1.21% loss. The Cedi opened the week trading at GHC 5.8394 from previous week’s opening trade value of GHC 5.8656.

On the Open Forex Market (oanda.com), the Cedi gained 0.20% and 0.22% against the Dollar and the Euro to trade at GHC 5.4870 and GHC 6.0566 at the start of the week from previous week’s trade value of GHC 5.4978 and GHC 6.0699 respectively. Against the Pound, it depreciated by 0.79% to begin the week trading at GHC 6.8296 from previous week’s trade value of GHC 6.7758. The Pound built on its previous week’s gains against the Cedi as investors and traders welcomed a move by the UK parliament to prevent Britain from crashing out of the European Union without a trade deal.

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 5.3097 [September 16th, 2019] indicating a 9.95% 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 5.4870 [September 16th, 2019], representing a 12.49% year-to-date depreciation of the Cedi against the US Dollar.

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