The Ghana Cedi posted a mixed performance at the start of the week ahead of a Monetary Policy Committee (MPC) meeting where it is expected the MPC would take a cautious stance in announcing its third monetary policy rate for the year. At the last MPC meeting, the Governor of the Bank of Ghana (BoG) warned that the committee will not hesitate to take immediate and decisive policy actions including tighter monetary policy stances in its future meetings. The consumer price index has been on an upward trend in the last three months of the year after it began the year at six-year low. The local currency has failed to maintain its momentum to post gains after a strong recovery at the close of the first quarter of the year. It recorded its sixth consecutive weekly decline against the US Dollar on the BoG inter-bank trading platform this week.
The Economist Intelligent Unit (EIU), in its country report on Ghana, has warned that the Cedi will continue to depreciate against its major trading partner currency mainly due to uncertainties over the 2020 general elections and also on low confidence in the financial sector. The research institution indicated that increased government spending ahead of the 2020 elections will push the local currency to depreciate further against the Dollar. The EIU also projected a slower economic growth of 6.5% against the government’s 7.6% projection largely due to slow growth in the agriculture sector.
On the BoG inter-bank trading platform, the Cedi recorded a depreciation of 0.18% against the US Dollar which has mainly benefited from an escalation in trade tensions between the US and China. The Dollar gained against most of its trading pairs including the Cedi after investors favoured the greenback as a safe-haven currency as trade war between the world’s two largest economies escalates. The Cedi traded at GHC 5.1061 at the start of the week from previous week’s trade value of GHC 5.0967. The Cedi, however, came in strong to build on previous week’s gain against the British Pound Sterling and recovered part of previous weeks’ losses against the Euro. It appreciated by 1.60% and 0.36% to begin the week at GHC 6.4990 and GHC 5.7029 from previous week’s trade values of GHC 6.6048 and GHC 5.7234 against the Pound and the Euro respectively.
On the Open Forex Market (oanda.com), the Cedi fell against the Dollar and the Euro as it depreciated by 0.97% and 0.33% respectively. It traded at GHC 5.2075 and GHC 5.8133 at the start of the week from previous week’s trading figures of GHC 5.1575 and GHC 5.7944 against the Dollar and the Euro respectively. Against the Pound, the Cedi gained 1.05% to build on previous week’s gain. It began the week trading at GHC 6.6315 per Pound from previous week’s trade value of GHC 6.7018 per Pound. The Pound fell against a host of currencies including the Cedi as growing Brexit uncertainties following a breakdown of talks between the UK government and the main opposition party, weighed on the Pound. Fears over a possible resignation of Prime Minister Theresa May added to investors’ nervousness as they sold the Pound.
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 5.1061 [May 20th, 2019] indicating a 5.74% 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 5.2075 [May 20th, 2019], representing a 6.76% year-to-date depreciation of the Cedi against the US Dollar.