The Ghanaian Cedi at the start of the week gained momentum to post gains against its three major trading partner currencies on the Bank of Ghana (BoG) inter-bank trading platform. The Cedi found support to maintain its stability in the month of July despite the government missing its revenue target for the first half of the year amidst rising national debt stock. On the Open Forex Market (oanda.com), the Cedi posted a mixed performance reversing previous week’s losses against the British Pound Sterling and the Euro. It, however, failed to post gains against the Dollar on the Open Forex Market.
The Cedi’s performance this week comes after the Finance Minister, in a mid-year budget review, noted that the Cedi’s general weak performance in the first half of the year (mainly on the back of external pressures) warranted a revision to the 2019 macroeconomic targets. The Minister stated that real GDP growth was revised downward from 7.6% to 7.1% on the heels of lower projected crude oil and gas volumes. He further noted that revenue shortfalls as well as the need to take precautionary measures in response to emerging security concerns warranted an upward review of the fiscal deficit from 4.2% of GDP to 4.5% of GDP. The budget statement, however, noted that the real effective exchange rate is expected to continue to be broadly aligned with the underlying fundamentals as Ghana records positive trade balances.
On the BoG inter-bank trading platform, the Cedi gained 0.03%, 1.90%, and 0.83%, week-on-week, to trade at GHC 5.2577, GHC 6.4459, and GHC 5.8514 at the start of the week from previous week’s trade values of GHC 5.2591, GHC 6.5707, and GHC 5.9004. The Cedi erased parts of previous week’s losses against the Dollar as expectations grew that the US Federal Reserve is expected to cut US policy rate by 25 basis points for the first time in a decade. The greenback fell against a host of trading pairs also on the back of data which showed that the US economy grew by 2.1% in the second quarter, weaker than the 3.15% recorded in the first quarter of the year.
On the Open Forex Market (oanda.com), the Cedi depreciated by 0.31%, week-on-week, against the Dollar to begin the week at GHC 5.4050 from previous week’s trade value of GHC 5.3882. Against the Pound and the Euro, the Cedi gained 1.23% and 0.43%, to trade at GHC 6.6450 and GHC 6.0176 at the start of the week from previous week’s trade values of GHC 6.7276 and GHC 6.0433. The Pound remained under pressure against most of its trading pairs as the likelihood of a disorderly Brexit led investors and traders to short the Pound following comments by the new Prime Minister that the UK would exit the single market with or without a trade deal on 31st October. Economists have warned that a no-deal Brexit could plunge Britain’s economy into recession.
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 5.2577 [July 29th, 2019] indicating an 8.88% 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 5.4050 [July 29th, 2019], representing a 10.80% year-to-date depreciation of the Cedi against the US Dollar.