Currency News [August 1, 2022]

The Cedi’s vulnerabilities as the Ghanaian economy continue to grapple with revenue underperformance, slowing growth, and soaring inflation among others sent the local currency to hit fresh lows against some of its major trading partner currencies. Significant difficulties facing the domestic economy prompted the finance ministry last week to revise the macroeconomic framework for the remaining half of the year. The government during the presentation of the mid-year budget review cut its overall GDP growth rate forecast from 5.8% to 3.7%, the fiscal deficit from 7.4% of GDP to 6.6% of GDP, and end period inflation of 8% to 28.5% among others.

As demand for forex continues to rise alarmingly amidst dwindling Gross International Reserves, the Cedi’s performance in the short-term will largely hinge on an expected USD 1.3 billion cocoa syndicated loan facility approved by Ghana’s parliament last week. This will be expected to shore up the country’s reserves which stood at USD 7.68 billion (3.4 months of import cover) in June down from USD 9.77 billion (4.4 months of import cover) at the start of the year.

The Cedi fell across the board against the Dollar, the Pound, and the Euro on the Bank of Ghana (BoG) inter-bank trading platform, coming in with a depreciation of 1.52%, 3.43%, and 2.05% after opening the week trading at GHS 7.6178, GHS 9.3440, and GHS 7.8199 from last week’s opening trade values of GHS 7.5038, GHS 9.0338, and GHS 7.6629 respectively. The greenback rose against the Cedi despite data revealing that the US economy contracted again in quarter two, fueling speculations of a less aggressive tightening stance.

On the Open Forex Market (onada.com), the Cedi was down by 3.51%, 5.26%, and 3.81%, having opened the week trading at GHS 8.5107, GHS 10.4094, and GHS 8.7216 from last week’s opening trade values of GHS 8.2219, GHS 9.8892, and GHS 8.4013 against the Dollar, the Pound and the Euro respectively. The Pound was up against the Cedi supported by growing expectations that the Bank of England will raise UK interest rates by 0.50% at its meeting next week.

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 7.6178 indicating a year-to-date (YTD) loss of 26.77% on the BoG inter-bank trading platform. It is also presently being quoted at GHS 8.5107 on the Open Forex Market (oanda.com) after opening the year at GHS 6.2112 indicating a YTD loss of 37.02%.