Currency News for June 1st 2020

As global risk sentiments begin to pick up following the easing of lockdown restrictions, high demand for forex sent the Ghanaian Cedi posting losses against its three major trading partner currencies on both the Bank of Ghana (BoG) inter-bank trading platform and on the Open Forex Market (oanda.com) at the start of the week. The Cedi after gaining traction in the first two months of the year, came under pressure as offshore investors exited the local market and fled to safe-haven assets and currencies on uncertainties clouding the global economy as the spread of the coronavirus disease heightened.

Sluggish demand for the government’s recent 3-year fixed-rate bond which was opened to offshore investors coupled with rising demand for forex underscores the Cedi’s recent weaknesses as investors continue to remain wary of the impacts of COVID-19 on emerging market assets. Demand for government assets has slowed after the government embarked on plans to reduce cost of credit in the country, a condition that has contributed to rising demand for forex. It is expected that the Cedi will continue to trade at weaker levels in the near-term unless the BoG can pump out forex to meet the growing demand.

On the BoG inter-bank trading platform, the Cedi lost 0.09%, 1.25%, and 1.55% to begin the week trading at GHC 5.6230, GHC 7.0209, and GHC 6.2619 from previous week’s trade values of GHC 5.6181, GHC 6.9339, and GHC 6.1662 against the US Dollar, the British Pound Sterling, and the Euro respectively. The Cedi failed to recover from previous week’s low against the Pound despite Brexit-linked risks, speculation about negative interest rates, and growing pile of debt which weakened the Pound against most of its trading pairs.

On the Open Forex Market (oanda.com), the Cedi depreciated 0.14%, 1.25%, and 1.72% at the start of the week to trade at GHC 5.8010, GHC 7.2117, and GHC 6.4559, from previous week’s trade values of GHC 5.7930, GHC 7.1225, and GHC 6.3466 against the Dollar, the Pound, and the Euro respectively. The Euro gained momentum to post gains against many of its trading pairs after European Union policymakers disclosed fiscal stimulus plans comprising of grants and loans intended to ease dissent among its member states.

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 5.6230 [June 1st, 2020] indicating a 1.55% 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 5.8010 [June 1st, 2020], representing a 1.84% year-to-date depreciation of the Cedi against the US Dollar.