After posting a brief recovery on the Open Forex Market (oanda.com) against its three major trading partner currencies, the Cedi this week failed to maintain its resilience to build on previous week’s strong performance. At the start of the week, the Cedi remained under pressure, erasing parts of its recent gains on the Open Forex Market, whiles on the Bank of Ghana (BoG) inter-bank trading platform, it posted a mixed performance against the US Dollar, the British Pound Sterling, and the Euro. The Cedi’s performance this week comes ahead of a mid-year budget review to be presented by the Minister of Finance to parliament where the government is expected to outline plans to improve revenue generation locally in a bid to reduce overreliance on foreign sources of funds. This phenomenon, many believe has led to the Cedi’s perennial depreciation against its major trading partner currencies.
At a monetary policy rate announcement last week, the governor of the Bank of Ghana noted that the country recorded significant gains in its major exports which improved the country’s export receipts. Dr. Ernest Addison further added that Ghana’s current account recorded a surplus, first in recent history, on the back of lower import bill and high export earnings which cumulatively yielded a robust balance of payments surplus. Despite these gains, the Monetary Policy Committee voted to keep the policy rate unchanged at 16.0% for the third consecutive time as the external components of the national debt stock reaches an alarming level while the slowdown in the fiscal consolidation process poses risks to the inflationary outlook.
On the BoG inter-bank trading platform, the Cedi depreciated 0.08% against the Dollar after posting its first gain in fourteen consecutive weeks last week. It traded at GHC 5.2591 at the start of the week from previous week’s trade value of GHC 5.2551. Against the Pound, the Cedi maintained its resilience as it gained 0.12%, extending its gains against the Pound to four weeks. It traded at GHC 6.5707 at the start of the week from previous week’s trade value of GHC 6.5783. The Pound continues to remain under pressure against many of its trading pairs including the Cedi as concerns that the new British prime minister will pull the UK out of the single market without a trade deal. These concerns have raised investor’s nervousness. The Cedi appreciated by 0.24%, week-on-week, against the Euro to trade at GHC 5.9004 from previous week’s trade figure of GHC 5.9147.
On the Open Forex Market (oanda.com), the Cedi depreciated by 0.65%, 0.20%, and 0.19% to begin the week trading at GHC 5.3734, GHC 6.7276, and GHC 6.0433 from previous week’s trade values of GHC 5.3533, GHC 6.7145, and GHC 6.0319 against the Dollar, the Pound and the Euro respectively. After two weeks of strengthening against the Dollar, the Cedi failed to gather momentum to build on previous weeks’ gains as bets that the US Fed will cut rates by 50 basis point abated. Robust US jobs and retail data revived confidence in the US economy, calming investors and traders nerves, who then bought the greenback.
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 5.2591 [July 22nd, 2019] indicating an 8.90% 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 5.3734 [July 22nd, 2019], representing a 10.46% year-to-date depreciation of the Cedi against the US Dollar.