Currency News [May 16, 2022]

The local currency traded mixed against a set of trading partner currencies this week as the world continues to grapple with stubbornly high inflation numbers with Ghana having its share after inflation in April jumped to its highest in eighteen years. The Cedi, after weeks of holding steadily lost steam at the start of the week as it declined against the greenback. It, however, maintained its firm footing against the Euro, adding to its previous weeks’ gains.

The latest inflation data announced last week revealed that the inflation rate printed at 23.6%, driven mainly by four divisions; Transport, Household Equipment & Routine maintenance, Food, and Housing, Electricity, Gas & Other fuels. The data also revealed that for the first time in more than two years, imported inflation exceeded that of domestic items, underlying the recent pressures on the local unit. We expect the monetary policy committee to hike the policy rate to bolster Cedi-denominated assets as global interest rate expectations become more hawkish.

On the Bank of Ghana (BoG) inter-bank trading platform, the Cedi traded lower by 0.10% to open the week at GHS 7.1239 from GHS 7.1167 quoted at last week’s open. The Dollar gained as investors flocked to the safe-haven currency over concerns of slowing global growth amid fears that efforts to tame inflation could lead to a recession. Against the Pound and the Euro, the Cedi soared by 0.80% and 1.50% after it began the week trading at GHS 8.7381 and GHS 7.4228 from last week’s opening rates of GHS 8.8090 and GHS 7.5361 respectively.

On the Open Forex Market (oanda.com), the Cedi was down by 0.97% and 0.55% against the Dollar and the Pound, having traded at GHS 7.6780 and GHS 9.4198 at this week’s open from GHS 7.6039 and GHS 9.3683 at last week’s open. The Cedi appreciated by 0.17% against the Euro after moving from GHS 8.0131 at last week’s open to GHS 7.9997 at this week’s open. Worries that escalating tensions with Russia could lead to a gas embargo, a recession in the EU, and keep the ECB from lifting rates weighed on the single currency.

The Cedi was quoted at GHC 6.0091 on the first trading day of the year against the Dollar and is currently being sold at GHS 7.1239 indicating a year-to-date (YTD) loss of 18.55% on the BoG inter-bank trading platform. It is also presently being quoted at GHS 7.6780 on the Open Forex Market (oanda.com) after opening the year at GHS 6.2112 indicating a YTD loss of 23.61%.