Currency News [January 30, 2023]

The Ghana Cedi remained pressured at the start of the week as expectations of a Bank of Ghana (BoG) monetary policy hike failed to give the local currency some respite. The central bank attributes the renewed pressures on the local currency on portfolio reversals, lower foreign direct investment inflows and the increased demand for forex.

Further hurting the performance of the Cedi against some of its major trading partner currencies is the dwindling state of Ghana’s Gross International Reserves (GIR) which ended 2022 at USD 6.2 billion (equivalent to 2.7 months of import cover) from a stock position of USD 9.7 billion (equivalent to 4.4 months of import cover) at the close of 2021. The Cedi’s performance at the week’s opening comes after the BoG’s Monetary Policy Committee (MPC) acting on the need to moderate liquidity in the system, further hiked the policy rate to 28.0%, the highest in the history of the MPC as part of efforts to drive inflation on a downward path.

On the BoG inter-bank trading platform, the Cedi traded down by 3.85%, 3.95%, and 4.06% to begin the week trading at GHS 10.8053, GHS 13.3705, and GHS 11.7636 from last week’s opening trade quotes of GHS 10.4052, GHS 12.8629, and GHS 11.3051 against the Dollar, the Pound, and the Euro respectively. The Dollar built on its earlier gains against the Cedi after data revealed the US economy maintained a strong pace of growth in the last quarter of 2022, cementing the case for the US Fed to maintain its hawkish stance for a much longer period.

On the Open Forex Market (oanda.com), the Cedi declined by 1.11%, 1.02%, and 1.03% from GHS 12.3790, GHS 15.3391, and GHS 13.4698 to open the week trading at GHS 12.5161, GHS 15.4949, and GHS 13.6085 against the Dollar, the Pound, and the Euro respectively. The Pound and Euro rose against the local unit as the market awaits a 50 basis points hike each in the UK and the EU later this week.

The Cedi was quoted at GHC 8.5903 on the first trading day of the year against the Dollar and is currently being sold at GHS 10.8053 indicating a year-to-date (YTD) loss of 25.78% on the BoG inter-bank trading platform. It is also presently being quoted at GHS 12.5161 on the Open Forex Market (oanda.com) after opening the year at GHS 10.0825 indicating a YTD loss of 24.14%.