Currency News For September 30th, 2019

The Ghanaian Cedi at the start of the week gained momentum to post gains 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) after the BoG announced its intention to start forward sales and purchases of forex. The BoG stated that the move comes on the back of improved liquidity on the forex market which would further strengthen the currency space. The Cedi has in recent times been under pressure against the US Dollar where the local currency has been trading at an all-time low against greenback. The announcement, however, sent the Cedi to recover some of its losses as it rose to a 1 month high against the Dollar, 7.6 months high against the Pound and 4.1 months high against the single currency on the Open Forex Market.

The Cedi’s performance this week comes after a BoG document revealed that the country’s Gross International Reserves (GIR) have improved on the heels of trade surplus which analysts believe may strengthen the hands of the BoG to increase its intervention in the local forex market. Data released by the central bank after the conclusion of its monetary policy committee meeting indicated that the country recorded a trade surplus of USD 2.6 billion between January and August, 2019 as against USD 1.4 billion within the same period last year. This further improved the GIR as it rose by USD 1.2 billion to USD 8.2 billion in the period to August, 2019, up from USD 7.0 billion as at end-December, 2019.

On the BoG inter-bank trading platform, the Cedi appreciated by 0.01%, 1.46%, and 0.96% to begin the week trading at GHC 5.3188, GHC 6.5447, and GHC 5.7974 from previous week’s trade values of GHC 5.3195, GHC 6.6419, and GHC 5.8498 respectively. The Cedi ended eight weeks of consecutive weekly losses against the greenback on concerns of a political showdown as a growing number of Democratic congressmen call for an impeachment inquiry against President Trump. The greenback was also hit by data which showed US consumer confidence fell in September, raising worries about the health of the US economy.

On the Open Forex Market (oanda.com), the Cedi gained 1.30%, 2.59%, and 2.06% to trade at GHC 5.4430, GHC 6.6947, and GHC 5.9425 at the start of the week from previous week’s trading figures of GHC 5.5167, GHC 6.8728, and GHC 6.0672 against the Dollar, the Pound, and the Euro respectively. The single currency lost against many of its trading pairs including the Cedi as a weak growth outlook weighed on the Euro. Quantitative easing policy adopted the European Central Bank as well as negative interest rates in the Euro area have made investments in other regions more attractive and boosted investors’ appetite towards other assets at the expense of the Euro.

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 5.3188 [September 30th, 2019] indicating a 10.14% 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 5.4430 [September 30th, 2019], representing an 11.58% year-to-date depreciation of the Cedi against the US Dollar.