After the government presented its fiscal policy for 2020 to Ghana’s parliament (in which the government intends to raise GHC 67.1 billion from revenues and grants and spend GHC 85.9 billion), the Cedi began the week with losses against its three major trading partner currencies. The Cedi began the week dipping to an all-time low against the US Dollar and fell to a more than 8 months low against the British Pound Sterling on the Bank of Ghana inter-bank trading platform as the government failed to mention in its budget statement plans to slow the depreciation of the local currency in 2020. On the Open Forex Market (oanda.com), the Cedi fell to a 35-week low against the Dollar and the Pound.
The Cedi’s performance at the start of the week comes at a time as businesses, investors, and importers raise their demand for forex ahead of the Christmas festivities and as businesses gear up for end-of-year activities. This is evident by bids which were 2.86x the offer, tendered by primary dealers in the BoG’s fourth forex forward auctions. A total of USD 71.5 million bids were tendered against a target amount of USD 25.0 million underscoring the relatively high demand for forex. As demand for forex continues to surge, it is anticipated that the Cedi will continue to remain under pressure in the remainder of the year.
On the BoG inter-bank trading platform, the Cedi fell against all three of its major trading partner currencies. It dipped by 0.07%, 0.77%, and 0.40%, week-on-week, to trade at GHC 5.3660, GHC 6.9532, and GHC 5.9419 at the start of the week from previous week’s trade values of GHC 5.3625, GHC 6.8999, and GHC 5.9181 against the Dollar, the Pound, and the Euro respectively. The Cedi posted its fourth consecutive weekly loss against the Dollar as investors fled for safe-haven currencies and assets after news reports indicated hopes for an initial trade deal between the United States and China dashed. It is reported that China is pessimistic about reaching a trade deal due to U.S. President Donald Trump’s reluctance to roll back tariffs.
On the Open Forex Market (oanda.com), the Cedi extended its weekly losses against the Dollar to 6 weeks and erased previous week’s gain against the Pound and the Euro. It depreciated by 0.31%, 1.22%, and 0.64%, week-on-week, to begin the week trading at GHC 5.5587, GHC 7.1980, and GHC 6.1519 from previous week’s trade values of GHC 5.5418, GHC 7.1109, and GHC 6.1130 against the Dollar, the Pound, and the Euro respectively. The Pound rose against a host of currencies including the Cedi as the ruling UK Conservative party led in opinion polls for next month’s general elections, bolstering chances of an orderly exit 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 5.3660 [November 18th, 2019] indicating an 11.12% 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 5.5587 [November 18th, 2019], representing a 13.95% year-to-date depreciation of the Cedi against the US Dollar.
