Currency News [August 8, 2022]

As global recession concerns amidst geopolitical tensions, rising interest rates in the advanced economies, and the rush for safe-haven assets continue to pose major challenges to developing economies, the Cedi remained pressured this week, hitting record lows against its three major trading partner currencies. On the domestic front, the Cedi’s vulnerability has been worsened by the escalation of the public debt stock, fiscal disruptions, and offshore portfolio disinvestments among others.

Last week, S&P Global Ratings sent Ghana’s foreign and local currency credit rating into the junk category, downgrading it from B-/B to CCC+/C. The internationally recognized rating agency also reviewed Ghana’s economic outlook to negative, depicting the domestic economy’s limited commercial financing options, and constrained external and fiscal buffers. This development is likely to dampen investor confidence and worsen the Cedi’s outlook.

On the Bank of Ghana’s (BoG) inter-bank trading platform, the Cedi was down by 5.14%, 3.84%, and 4.67% after it was quoted at GHS 8.0091, GHS 9.7030, and GHS 8.1848 at the week’s open from last week’s opening trade values of GHS 7.6178, GHS 9.3440, and GHS 7.8199 against the Dollar, the Pound, and the Euro respectively. The greenback extended its weekly gains against the Cedi for the thirteenth consecutive time buoyed by higher Treasury yields after strong US jobs data lifted expectations for more aggressive rate tightening.

On the Open Forex Market (oanda.com), the Cedi plunged by 2.55%, 1.35%, and 1.98% from last week’s opening quotes of GHS 8.5107, GHS 10.4094, and GHS 8.7216 to open the week trading at GHS 8.7275, GHS 10.5496, and GHS 8.8946 against the Dollar, the Pound, and the Euro respectively. The Pound added to its gains against the Cedi after the Bank of England handed down its biggest rate increase in nearly 30 years, increasing UK rates by 0.50% to 1.75%.

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 8.0091 indicating a year-to-date (YTD) loss of 33.28% on the BoG inter-bank trading platform. It is also presently being quoted at GHS 8.7275 on the Open Forex Market (oanda.com) after opening the year at GHS 6.2112 indicating a YTD loss of 40.51%.