Currency News [March 27, 2023]

In a surprise turn of events as Ghana’s Monetary Policy Committee (MPC) handed down yet again another policy hike, the Cedi responded favourably to the news on the Open Forex Market (oanda.com) following attempts by the central bank to rein in foreign investments at a time that inflation is seen to be following a declining trajectory. The MPC’s decision to hike interest rate by an additional 150 basis points (bps) to a record high of 29.5% widens the gap between the policy rate and yields on Treasury instruments.

The Cedi is expected to see some stability as its outlook improves following commitments by Ghana’s bilateral lenders to help the West African nation to restructure its debt. Earlier this week, the visiting US vice president assured that her government will continue to push all bilateral creditors to provide meaningful debt reduction for the country. This follows an earlier promise by Ghana’s biggest bilateral creditor, China, to support Ghana to restructure its debt to unlock a US 3.0 billion IMF bailout package.

On the Bank of Ghana (BoG) inter-bank trading platform, the Cedi was little changed against the Dollar, opening the week at a trade value of GHS 11.0197 from last week’s opening quote of GHS 11.0195. Against the Pound and the Euro, the Cedi lost by 0.08% and 0.57% to trade at GHS 13.5278 and GHS 11.8790 at the week’s open from last week’s opening trade quotes of GHS 13.5165 and GHS 11.8120 respectively. The Pound rose against the Cedi after the Bank of England raised the UK’s interest rate by 25 bps to 4.25%, despite hinting that it may have ended its run of rate hikes.

On the Open Forex Market (oanda.com), the Cedi rose by 1.36%, 1.08%, and 0.61% from GHS 12.4249, GHS 15.1934, and GHS 13.2917 at last week’s open to begin this week trading at GHS 12.2555, GHS 15.0297, and GHS 13.2106 against the Dollar, the Pound, and the Euro respectively. The Dollar fell against a host of currencies including the Cedi on the back of improving risk sentiments following rising optimism that the recent bank fails may not have a widespread effect.

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 11.0197 indicating a year-to-date (YTD) loss of 28.28% on the BoG inter-bank trading platform. It is also presently being quoted at GHS 12.2555 on the Open Forex Market (oanda.com) after opening the year at GHS 10.0825 indicating a YTD loss of 21.55%.