Currency News For September 2nd, 2019

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-bank trading platform and on the Open Forex Market (oanda.com). The Cedi extended its losses as it dipped to an all-time low against the US Dollar on the BoG inter-bank trading platform. It was however emboldened by general economic weaknesses in the Euro area as well in the UK as it recovered parts of previous weeks’ losses against the British Pound Sterling and the Euro.

The local currency has been under intense pressure against its three major trading partner currencies for most part of the year as strong demand for forex is unmet by the BoG’s regular forex auction. This coupled with the maturity of debt instruments held by foreign investors as well as low offshore investor participation in local Treasury bond issuances have contributed to the low circulation of forex among currency exchangers. With favourable Gross International Reserves as Ghana begins to record trade surpluses on its current account, it is expected that the BoG will be spurred to intervene in the currency market if demand for forex continues to expand beyond expectations.

On the BoG inter-bank trading platform, the Cedi recorded its fifth loss in a row against the Dollar as it depreciated by 0.05% to trade at GHC 5.2840 at the start of the week from previous week’s trade value of GHC 5.2815. Against the Pound and Euro, it gained momentum to post 0.38% and 0.94% appreciation against the pair. It began the week at GHC 6.4338 and GHC 5.8119 from previous week’s trade values of GHC 6.4582 and GHC 5.8668 against the Pound and the Euro respectively. Investors and traders sold the Pound as political risks following a move to shut down Britain’s parliament increased the chances that Britain will crash out of the trading block without a trade deal. Last week, UK prime minister received a nod from the Queen to suspend UK’s parliament, limiting lawmakers’ chances of preventing a no-deal Brexit.

On the Open Forex Market (oanda.com), the Cedi erased previous week’s 0.13% gain against the Dollar as it depreciated by 1.14% to begin the week at a trading value of GHC 5.4826 from previous week’s trade value of 5.4207. The Cedi rose against the Pound and the Euro to register a 0.04% and 0.17% gain respectively. It traded at GHC 6.6344 and GHC 6.0178 at the start of the week from previous week’s trade figures of GHC 6.6368 and GHC 6.0282 against the Pound and the Euro respectively. The single currency fell against most of its trading partner currencies as expectations grew that negative interest rates were projected to last longer than anticipated. This comes on the back of the European Central Bank’s (ECB) promise to extend monetary policy stimulus package following a series of poor Eurozone economic data.

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 5.2840 [September 2nd, 2019] indicating a 9.42% 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 5.4826 [September 2nd, 2019], representing a 12.39% year-to-date depreciation of the Cedi against the US Dollar.