Currency News [July 18, 2022]

The Cedi resumed its freefall against its three major trading partner currencies after registering some gains against the Pound and the Euro over the past few weeks. The Cedi remained under intense pressure as the rising public debt stock added to Ghana’s sovereign debt vulnerability. This follows reports by Bloomberg, ranking Ghana second in terms of countries with the highest debt default risks in 2022. Data from the Bank of Ghana (BoG) puts Ghana’s debt at GHS 391.9 billion as of March 2022 representing 78.0% of GDP. However, Bloomberg is projecting the debt level to worsen to 84.6% by the close of the year.

The Cedi’s performance in the weeks ahead will be guided by the decisions of the Monetary Policy Committee meeting to be held later in the week where investors’ attention will be on the magnitude of policy rate hike, the level of the country’s international reserves, and the debt position. In the interim, we expect to see the Cedi lose some further grounds as global inflation continues to worsen amid fears of the world economy entering into a recession.

On the BoG inter-bank trading platform, the Cedi was down by 0.82%, 1.54%, and 1.76% having opened the week trading at GHS 7.3882, GHS 8.8592, and GHS 7.5084 from last week’s opening quotes of GHS 7.3282, GHS 8.7249, and GHS 7.3784 against the Dollar, the Pound, and the Euro respectively. The Dollar rose for the ninth consecutive time this week on growing expectations that the US Fed will hike US rates by 100 basis points (bps) after the release of the latest red-hot inflation data.

On the Open Forex Market (oanda.com), the Cedi declined by 0.51%, 0.58%, and 0.90% to trade at GHS 8.1329, GHS 9.7157, and GHS 8.2439 from last week’s opening quotes of GHS 8.0912, GHS 9.6593, and GHS 8.1706 against the Dollar, the Pound, and the Euro respectively. The Euro rallied this week from recent lows against a basket of currencies after it emerged that European Central Bank policymakers are likely to lift the bloc’s interest rates by either 25 or 50 bps at its July sitting.

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 7.3882 indicating a year-to-date (YTD) loss of 22.95% on the BoG inter-bank trading platform. It is also presently being quoted at GHS 8.1329 on the Open Forex Market (oanda.com) after opening the year at GHS 6.2112 indicating a YTD loss of 30.94%.