Currency News [February 20, 2023]

The Ghanaian Cedi after a brief reprieve, opened the week pressured despite assurances given by the finance minister last week in an address to Ghana’s parliament that the conclusion of the Domestic Debt Exchange Programme (DDEP) will drive improvement in the exchange rates. The market, however, focused its attention on a recent downgrade of Ghana’s long-term foreign currency Issuer Default Rating (IDR) by Fitch Ratings which is expected to further restrict capital flows to the country.

The Cedi crumbled against its three major trading partner currencies on the retail market following Fitch’s downgrade of Ghana’s long-term foreign currency IDR to ‘RD’ (Restricted Default) from ‘C’, citing the sovereign’s missing the grace period to make a coupon payment on one of its Eurobonds. The local currency’s outlook is however expected to receive a boost as Ghana inches closer to an IMF board-level agreement for a USD 3.0 billion bailout package.

On the Bank of Ghana (BoG) inter-bank trading platform, the Cedi lost by 0.04% against the Dollar, opening the week at a trade value of GHS 10.8093 from last week’s trade value of GHS 10.8052. The Dollar gained against a basket of currencies supported by strong US economic data and hawkish comments from Fed policymakers which drove up expectations of more interest rate hikes. Against the Pound and the Euro, the Cedi traded higher by 0.83% and 0.20% from GHS 13.1078 and GHS 11.5773 at last week’s open to begin this week trading at GHS 12.9993 and GHS 11.5539 respectively.

On the Open Forex Market (oanda.com), the Cedi plunged by 3.51%, 3.06%, and 3.45% to trade at GHS 12.7383, GHS 15.3305, and GHS 13.6689 at this week’s open from GHS 12.3063, GHS 14.8755, and GHS 13.1591 quoted at last week’s open. The Pound rose against the Cedi as the market increased their bets on Bank of England rate hikes after UK companies unexpectedly reported the first growth in more than six months.

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 10.8093 indicating a year-to-date (YTD) loss of 25.83% on the BoG inter-bank trading platform. It is also presently being quoted at GHS 12.7383 on the Open Forex Market (oanda.com) after opening the year at GHS 10.0825 indicating a YTD loss of 26.34%.