Currency News [February 5, 2024]

The Cedi extended its struggles against some of its trading partner currencies despite the influx of forex support from the International Monetary Fund (IMF) and the World Bank last month. The arrival of the USD 600.0 million from the IMF under the ongoing Extended Credit Facility programme and USD 300.00 million from the World Bank was expected to shore up Ghana’s forex reserves to enable the local currency to have some respite in the near term. The Cedi has however been nonresponsive to these inflows as it continues to be subdued against the US Dollar at a time when there is a resurgence of opposition to austerity measures being implemented by the government.

The Cedi’s performance comes amidst a call by the IMF urging Ghana to adhere to the agreed-upon austerity measures in a bid to steer its way out of the economic difficulties. These calls come on the back of media reports suggesting that the government has opted to cancel a key revenue mobilization vehicle, the 15.0% Value Added Tax (VAT) on electricity. To make up for the shortfall in revenue, the government is set to engage the IMF on possible avenues to bridge the revenue gap.

On the Bank of Ghana (BoG) inter-bank trading platform, the Cedi traded down by 0.55% to begin the week at a trade value of GHS 12.0771 from last week’s opening trade value of GHS 12.0110 against the Dollar. The Dollar received a boost following a string of hotter-than-expected U.S. economic readings, as well as comments from the Fed chair, who said that rates will remain steady for the time being. Against the Pound and the Euro, the Cedi traded up by 0.62% and 0.14% to begin the week at trade values of GHS 15.1290 and GHS 12.9596 from last week’s opening trade values of GHS 15.2239 and GHS 12.9775 respectively.

On the Open Forex Market (oanda.com), the Cedi declined by 0.56% to trade at GHS 12.4464 at the week’s opening from last week’s opening trade values of GHS 12.3765 against the Dollar. Against the Pound and the Euro, the Cedi edged up by 0.42% and 0.11% to open the week trading at GHS 15.6512 and GHS 13.3887 from last week’s opening trade values of GHS 15.7177 and GHS 13.4037 respectively. A decision by the Bank of England to hold interest rates at a nearly 16-year high whilst pushing back against the likelihood of near-term rate cuts did little to lift the Pound against some peers.

The Cedi was quoted at GHC 11.8859 on the first trading day of the year against the Dollar and is currently being sold at GHS 12.0771 indicating a YTD loss of 1.58% on the BoG inter-bank trading platform. It is also presently being quoted at GHS 12.4464 on the Open Forex Market (oanda.com) after opening the year at GHS 11.9945 indicating a YTD loss of 3.77%.