Currency News [June 27, 2022]

Weaknesses in the local currency worsened as the Cedi opened the week nursing losses against its three major trading partner currencies on both the Bank of Ghana (BoG) inter-bank trading platform and the Open Forex Market (oanda.com). The Cedi’s woes come amidst fears that Ghana’s central bank had begun rationing forex as demand by corporates, importers, and investors continue to surge at an alarming level.

Heavy drawdowns of Ghana’s reserves to support the local currency and to meet debt obligations have come at a great cost. Ghana’s Gross International Reserves as of April 2022 stood at USD 8.34 billion, having declined from a high of USD 11.44 billion in August last year. As the country’s import bill widens, exacerbated by rising crude oil prices, we expect Ghana’s reserves to weaken further as the Eurobond market remains shut to Ghana. The Cedi’s outlook is thus expected to deteriorate going into the second half of the year.

On the BoG inter-bank trading platform, the Cedi traded lower at 0.19%, 0.60%, and 0.88% to open the week quoted at GHS 7.2236, GHS 8.8807, and GHS 7.6578 from last week’s opening trade values of GHS 7.2096, GHS 8.8274, and GHS 7.5909 against the Dollar, the Pound, and the Euro respectively. The Dollar gained as investors took to safety in the greenback on fears of looming economic recession brought about by central banks’ rate hikes to tame rising inflation.

On the Open Forex Market (oanda.com), the Cedi declined by 0.14%, 0.45%, and 0.70% to begin the week at GHS 7.9972, GHS 9.8217, and GHS 8.4592 from last week’s opening quotes of GHS 7.9858, GHS 9.7772, and GHS 8.4003 against the Dollar, the Pound, and the Euro respectively. Expectations that the European Central Bank will soon hand down its first rate increase in more than a decade boosted the single currency’s appeal against some of its peers.

 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 7.2236 indicating a year-to-date (YTD) loss of 20.21% on the BoG inter-bank trading platform. It is also presently being quoted at GHS 7.9972 on the Open Forex Market (oanda.com) after opening the year at GHS 6.2112 indicating a YTD loss of 28.75%.