After Ghana’s economy recorded its slowest growth for the third consecutive time since the third quarter of 2018, the Cedi fell against all its trading partner currencies on both the Bank of Ghana (BoG) inter-bank trading platform and on the Open Forex Market (oanda.com). Data released by the Ghana Statistical Services indicated the economy grew by 5.7% in the second quarter of 2019, down from 6.7% in the first quarter of the year. The slow growth is a deviation of an earlier robust forecast of 8.8% from the International Monetary Fund (IMF), mainly indicating general weaknesses in the economy. The local currency continues to remain under pressure against some of its major trading partner currencies as low participation by offshore investors has failed to prop up portfolio maturities of investments held by other nationals.
The Cedi’s weakened performance this week comes after the Monetary Policy Committee (MPC) of the BoG kept its key rate unchanged at 16.0% for the fourth consecutive time on concerns of the slow pace of fiscal consolidation. Commenting of the Cedi’s recent performance, the governor of the central bank assured investors that the country’s reserves are in a strong position to support any move by the central bank to support the local currency. Data from the BoG indicated that Ghana recorded a trade surplus of a little over USD 2.5 billion in the first eight months of the year compared to USD 1.4 billion in the same period last year. This positive development lifted Ghana’s Gross International Reserves (GIR) by USD 1.2 billion to USD 8.2 billion as at end-August, 2019 from USD 7.0 billion as at the close of last year.
On the BoG inter-bank trading platform, the Cedi nursed losses against the US Dollar and the British Pound sterling to build on previous weeks’ losses against the pair and also erased part of previous week’s gain against the Euro. It depreciated by 0.18%, 0.70%, and 0.18% to begin the week trading at GHC 5.3195, GHC 6.6419, and GHC 5.8498 from previous week’s trading values of GHC 5.3097, GHC 6.5957, and GHC 5.8394 against the Dollar, the Pound, and the Euro respectively. The Dollar extended its weakly gains against the Cedi to eight weeks after the US Fed eased US rates by 25 basis points but sounded less bleak about the pace of US economic growth.
On the Open Forex Market (oanda.com), the Cedi fell by 0.50%, 0.63%, and 0.18%, week-on-week, to trade at GHC 5.5147, GHC 6.8728, and GHC 6.0672 at the start of the week from previous week’s trade values of GHC 5.4870, GHC 6.8296, and GHC 6.0566 against the Dollar, the Pound and the Euro respectively. The Cedi fell against the Pound despite inflation rate growing at its slowest pace in more than three years in the UK. Consumer prices in the UK for the month of August fell from 2.1% in July to 1.7%, below expectation. Consequently, the Bank of England stalled its policy rate at 0.75%.
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 5.3195 [September 24th, 2019] indicating a 10.16% 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 5.5147 [September 24th, 2019], representing a 13.05% year-to-date depreciation of the Cedi against the US Dollar.