The Ghanaian Cedi extended its losing streak this week against its three major trading partner currencies on both the Bank of Ghana (BoG) inter-bank trading platform and on the Open Forex Market as strong demand for forex by importers and corporate bodies continue to outstrip supply. Market observers attributed the decline of the Cedi against some of its major trading partner currencies in the first month of the year to slight increases in demand by importers who needed to restock their merchandise after the yuletide. The development has however extended into the second month of the year after the Cedi recorded its seventh week-on-week consecutive decline against the US Dollar on the BoG inter-bank trading platform. Expectations of a further decline in the Cedi against its three major trading partner currencies has also fuelled speculative activities resulting in the Cedi recording a year-to-date depreciation of 6.27% as compared to a depreciation of 3.22% recorded same time last year against the British Pound Sterling.
The central bank’s regular intervention in the currency market has been limited as the country’s Gross International Reserves (GIR) reduce. After its monetary policy committee meeting, a Bank of Ghana official report revealed that Ghana’s GIR declined from USD 7.6 billion at the close of December, 2017 to USD 7.0 billion as at the close of 2018, a phenomenon which could limit the regular intervention of the central bank in the currency market.
On the BoG’s inter-bank trading platform, the Cedi recorded losses across the board against all its three major trading partner currencies to build on previous weeks’ loss against the Dollar and also erased previous week’s gains posted against the Pound and the single currency. It depreciated by 0.03%, 0.46% and 0.30%, week-on-week, to begin the week at GHC 5.0042, GHC 6.4699 and GHC 5.6654 from previous week’s trade values of GHC 5.0028, GHC 6.4401 and GHC 5.6482 against the Dollar, the Pound and the Euro respectively. The US Dollar recorded a modest gain compared to previous weeks against the Cedi after a report showed that US retail sales posted its worst drop since September, 2009, suggesting a sudden slowdown in economic activities. The disappointing data was in support of the US Fed’s current stance towards patience in its policy rate hikes.
On the Open Forex Market (oanda.com), the Cedi built on previous week’s decline against its three major trading partner currencies. It lost 2.03%, 2.21% and 2.14% to trade at GHC 5.2486, GHC 6.7816 and GHC 5.9385 this week from previous week’s trade figures of GHC 5.1440, GHC 6.6351 and GHC 5.8138 against the Dollar, the Pound and the Euro respectively. The Pound gained against a host of currencies including the Cedi buoyed by data which showed that UK’s retails picked-up in January, shaking off some of the recent gloomy performance of UK macroeconomic variables.
According to the Bank of Ghana inter-bank rates, the Ghanaian Cedi began 2019 at GHC 4.8291 [January 2nd, 2019] against the US Dollar and is currently selling at GHC 5.0042 [February 19th, 2019] indicating a 3.63% year-to-date depreciation. Similarly, on the Open Forex Market (oanda.com), the Ghanaian Cedi traded at GHC 4.8780 [January 2nd, 2019] and is currently trading at GHC 5.2486 [February 19th, 2019], representing a 7.60 % year-to-date depreciation of the Cedi against the US Dollar.