Currency News for May 4th 2020

The Ghanaian Cedi fell across the board against its three major trading partner currencies for the second consecutive time this week underscoring the struggles of the local currency amidst global financial market uncertainties as investors continue to seek solace in safe-haven assets and currencies. The Cedi has generally come under pressure in recent times after a robust performance in the first two months of the year as the impact of the COVID-19 pandemic hits hard on emerging and developing economies.

Although a directive issued by Ghana’s central bank directed banks to suspend declaring and subsequently paying dividends and other forms of distributions to shareholders for the 2019 and 2020 financial years may reduce demand for forex, this measure may spark a broad sell-off of local bonds held by offshore investors which may further mount pressure on the local currency. The last forex forward auctions held on 21^st April showed that demand for forex continues to surge as a total of USD 59.90 million bids were submitted against a target of USD 25.00 million.

On the Bank of Ghana (BoG) inter-bank trading platform, the Cedi plummeted by 0.96%, 2.45%, and 1.91% to begin the week trading at GHC 5.6038, GHC 7.0625, GHC 6.1296 from previous week’s trade values of GHC 5.5507, GHC 6.8934, and GHC 6.0146 against the US Dollar, the British Pound Sterling, and the Euro respectively. The Dollar added on to previous weeks’ gains against the Cedi as traders and investors worried about rising tensions between the US and China over the novel coronavirus.

On the Open Forex Market (oanda.com), the Cedi dipped by 0.17%, 0.34%, and 1.00% to trade at GHC 5.8109, GHC 7.2292, and GHC 6.3490 at the start of the week from previous week’s trading figures of GHC 5.8011, GHC 7.2047, and GHC 6.2859 against the Dollar, the Pound, and the Euro respectively. The Pound built on previous week’s gain against the Cedi as investor risk appetite improved following a massive roll-out of stimulus package by global central banks.

According to the Bank of Ghana inter-bank rates, the Ghanaian Cedi began the year 2020 at GHC 5.5370 [January 2nd, 2020] against the US Dollar and is currently selling at GHC 5.6038 [May 4th, 2020] indicating a 1.21% year-to-date depreciation. Similarly, on the Open Forex Market (oanda.com), the Ghanaian Cedi traded at GHC 5.6961 [January 2nd, 2020] and is currently trading at GHC 5.8109 [May 4th, 2020], representing a 2.02% year-to-date depreciation of the Cedi against the US Dollar.