Cedi set to end 2021 with the lowest depreciation rate in almost 3 decades
The local currency is expected to end this year with the lowest depreciation rate since 1992.
The anticipation comes on the back of the impressive cumulative year-to-date depreciation rate of 1.7 percent against the greenback as noted by the Central Bank.
Over the past few years, the cedi has shown stability bouncing back from its highest annual depreciation rate of 31 percent in 2014.
While the cedi depreciated by 12.9 percent in 2019, it came down to 3.9 percent in 2020, and with three months to end 2021, the 1.7 percent depreciation rate is the lowest depreciation since 1992.
Despite the optimism expressed by some analysts on the cedi ending 2021 with the lowest depreciation rate ever recorded in the 4th Republic, there however remain some risks which might alter the slow-paced depreciation rate of the cedi this year.
Related Story: Cedi posts 1.7% YTD depreciation rate to the dollar
The risks include the upward trend of headline inflation coupled with the high demand for the American dollar by businesses especially ahead of the Christmas festivities, thereby putting pressure on the cedi and causing it to depreciate rapidly.
Meanwhile, against the Euro, the cedi has posted some strong gains from the beginning of the year.
An examination of the Bank of Ghana’s September 2021 Summary of Economic and Financial Data indicates that the cedi since the start of this year has been gradually appreciating against the Euro posting a 1 percent appreciation rate in January, 2.4 percent in April and then 3.6 percent in July.
The cedi appreciated by some 2.6 percentage points against the Euro in the month of September indicating a decline in its rate of appreciation against the Euro
But unlike its performance against the Euro, the cedi with regards to its performance against the British Pound, has been depreciating since the start of 2021, recording a depreciation rate of 3.6 percent in May, 1.2 percent in July and 2.3 percent in September.
