Currency News for October 26th 2020

The Ghana Cedi failed to build on previous week’s resilient performance as it lost traction this week against its three major trading partner currencies. The Cedi at the start of the week weakened against the US Dollar, the British Pound Sterling, and Euro on both the Bank of Ghana (BoG) inter-bank trading platform and on the Open Forex Market (oanda.com).

The Cedi’s performance comes after the World Bank listed Ghana as a Heavily Indebted Poor Country (HIPC) on rising debt levels. According to the International Monetary Fund (IMF), Ghana’s debt to GDP ratio which currently stands at 68.3% will climb to 76.7% by the close of the year. This development is likely to cause uneasiness among offshore investors who may pull their investments from domestic assets. As the Finance Minister prepares to present an advanced Budget for the first quarter of 2021 to Parliament next week, it will be expected that the government will address the rising debt stock to calm investors’ nerves as well as level out the government’s plans for the local currency as the year draws to a close.

On the BoG inter-bank trading platform, the Cedi depreciated by 0.03%, 0.21%, and 0.36% to trade at GHC 5.7104, GHC 7.4377, and GHC 6.7511 at the start week from previous week’s trade values of GHC 5.7085, GHC 7.4221, and GHC 6.7266 against the Dollar, the Pound, and the Euro respectively. The Dollar recorded its fifth consecutive gain against the Cedi boosted by its safe-haven appeal as rising coronavirus infections in Europe and America, coupled with uncertainties clouding the US elections, increased Dollar buying.

On the Open Forex Market (oanda.com), the Cedi erased part of previous week’s gains against the three currencies. The Cedi weakened by 0.30%, 0.78%, and 0.91% to begin the week trading at GHC 5.8284, GHC 7.5930, and GHC 6.8912 from previous week’s trading figures of GHC 5.8112, GHC 7.5343, and GHC 6.8294 against the Dollar, the Pound, and the Euro respectively. Following an extension to the trade talks, the Pound recovered part of its previous week’s decline against the local currency as rising optimism of a breakthrough in Brexit negotiations raised expectations of a deal being reached before the December deadline.

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 5.7104 [October 26th, 2020] indicating a 3.13% 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 5.8284 [October 26th, 2020], representing a 2.32% year-to-date depreciation of the Cedi against the US Dollar.