Currency News [March 14, 2022]

As speculative activities rage on following tight forex liquidity, the Ghana Cedi remained pressured as it slid further this week to build on previous weeks’ losses against some of its major trading partner currencies. Pressures on the local currency have come on the back of both internal and external developments which mainly led to investor nervousness and a rise in uncertainties.

Last week, the Bank of Ghana (BoG) sold USD 75.0 million in its forex forward rates auction in anticipation to meet the growing demand. This was, however, outstripped by USD 296.75 million in total bids submitted indicating a strong Dollar demand. This coupled with dwindling offshore investors’ participation in domestic debt securities gave minimal support to the Cedi. A recent sale of a 5-year bond opened to both residents and non-residents secured GHS 862.76 million despite the government’s intention to raise GHS 1,000.00 million. We expect further Cedi stress on the back of tight liquidity conditions.

On the BoG inter-bank trading platform, the Cedi was down by 0.29% and 1.21% to open the week trading at GHS 7.0335 and GHS 7.7276 per the Dollar and the Euro from last week’s opening quotes of GHS 7.0135 and GHS 7.6354 respectively. The Dollar traded higher against a basket of currencies including the Cedi as investors await the announcement of the first US Fed rate hike in 2022 later in the week. Against the Pound, the Cedi posted its first weekly rise in six weeks as it edged up by 0.30% to trade at GHS 9.1858 at the start of the week, from last week’s opening trade value of GHS 9.2136.

On the Open Forex Market (oanda.com), the Cedi weakened by 1.33%, 0.30%, and 2.04% after it began the week trading at GHS 7.1868, GHS 9.3653, and GHS 7.8660 from last week’s opening quotes of GHS 7.0924, GHS 9.3373, and GHS 7.7087 against the Dollar, the Pound, and the Euro respectively. The Euro gained traction this week against a host of currencies after the European Central Bank announced plans to phase out monetary stimulus beginning third quarter.

The Cedi was quoted at GHC 6.0091 on the first trading day of the year against the Dollar and is currently being sold at GHS 7.0335 indicating a year-to-date (YTD) loss of 17.05% on the BoG inter-bank trading platform. It is also presently being quoted at GHS 7.1868 on the Open Forex Market (oanda.com) after opening the year at GHS 6.2112 indicating a YTD loss of 15.71%.