The Ghanaian Cedi extended its losing streak 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). At the start of the week, the local currency fell to an all-time low against the US Dollar, the British Pound Sterling, and the Euro as demand pressure for forex continue to mount up. The Cedi recorded its eighth consecutive weekly loss this week on the BoG inter-bank and was on course for its worst decline in more than four years against the Dollar.
Results from the BoG’s recent forex forward auction showed a surge in demand for forex from USD 83.60 million as of the last auction to USD 91.26 million bids in the recent auction. The growing demand for forex by importers, businesses, and other investors ahead of the yuletide has intensified the Cedi’s depreciation in the last quarter of the year. Despite the central bank significantly increasing its supply from USD 3.75 million sold the previous time to USD 25.00 million, this was over 3.5 times below bids submitted. As the BoG continue to miss demand pressures, the Cedi is expected to be pressured to maintain stability as the year draws to a close.
On the BoG inter-bank trading platform, the Cedi recorded its third week of depreciation against all three major trading partner currencies. It lost 0.06%, 1.49%, and 0.70%, week-on-week, to begin the week trading at GHC 5.5433, GHC 7.3947, and GHC 6.1767 from previous week’s trade values of GHC 5.5397, GHC 7.2863, and GHC 6.1338 against the Dollar, the Pound, and the Euro respectively. The greenback rose against a host of currencies including the Cedi after the US and China announced a ‘Phase one’ agreement that reduces US tariffs on Chinese goods in exchange for increased Chinese purchases of American farm produce. Continuous uncertainties about the deal kept forex investors from rushing into emerging market currencies.
On the Open Forex Market (oanda.com), the Cedi depreciated by 1.38%, 2.94%, and 2.07% to trade at GHC 5.7704, GHC 7.7070, and GHC 6.4282 at the start of the week from previous week’s trade values of GHC 5.6917, GHC 7.4867, and GHC 6.2977 against the Dollar, the Pound, and the Euro respectively. The Pound posted its fifth consecutive weekly gain against the Cedi following last week’s ruling Conservative Party win in the UK elections which gives the party the clear mandate to execute Brexit. The Pound gained as investors perceived a Conservative win as a move to end the Brexit uncertainty that has harmed the UK economy and undermined investment in UK assets.
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 5.5433 [December 16th, 2019] indicating a 14.79% 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 5.7704 [December 16th, 2019], representing an 18.30% year-to-date depreciation of the Cedi against the US Dollar.