Currency News for July 27th 2020

After the 2020 mid-year budget review presented to Ghana’s parliament failed to outline measures to be implemented by the government over the second half of the year to tame the sharp depreciation of the local currency, the Cedi began the week dipping against all its three major trading partner currencies on both the Bank of Ghana (BoG) inter-bank trading platform and the Open Forex Market (oanda.com).

Commenting on the Cedi’s performance in the first half of the year, the minister of finance noted that “the deterioration in financial market risk sentiment due to the spread of COVID-19 as well as the seasonal demand pressures from the energy and corporate sectors” contributed to the wearing off of the local currency’s gains in the first quarter of the year. Data released by the central bank after the conclusion of its latest monetary policy committee meeting, however, showed that the nation had accumulated USD 9.2 billion (4.3 months of imports cover) in Gross International Reserves as at June, 2020, which should enable the BoG to provide support to the local currency in the medium term.

On the BoG inter-bank trading platform, the Cedi tumbled by 0.11%, 1.97%, and 2.95% to begin the week trading at GHC 5.6807, GHC 7.3202, and GHC 6.6821 from previous week’s trade values of GHC 5.6742, GHC 7.1785, and GHC 6.4905 against the US Dollar, the British Pound Sterling, and the Euro respectively. The Pound extended its weekly gains against the Cedi for the fourth consecutive time this week despite growing concerns that the UK is likely to break from the EU without a trade deal.

On the Open Forex Market (oanda.com), the Cedi dipped by 0.38%, 2.38%, and 2.90% to trade at GHC 5.7936, GHC 7.4487, and GHC 6.7954 at the start of the week from previous week’s trade figures of GHC 5.7718, GHC 7.2758, and GHC 6.6037 against the Dollar, the Pound, and the Euro respectively. The Euro built on previous week’s gains against the Cedi after countries in the Eurozone reached an agreement on a massive stimulus plan to revive the bloc’s economies that have been worst hit by the pandemic.

According to the Bank of Ghana inter-bank rates, the Ghanaian Cedi began the year 2020 at GHC 5.5370 [January 2nd, 2020] against the US Dollar and is currently selling at GHC 5.6807 [July 27th, 2020] indicating a 2.60% year-to-date depreciation. Similarly, on the Open Forex Market (oanda.com), the Ghanaian Cedi traded at GHC 5.6961 [January 2nd, 2020] and is currently trading at GHC 5.7936 [July 27th, 2020], representing a 1.71% year-to-date depreciation of the Cedi against the US Dollar.