Down goes the cedi, crosses GHS 7 to dollar and GHS 9 to the pound on the retail market

Down goes the cedi, crosses GHS 7 to dollar and GHS 9 to the pound on the retail market

The local currency has crossed the GHS 7 and GHS 9 to the dollar and pound mark respectively on the retail market in less than two months into the year.

With regards to the euro, the cedi is trading at GHS 7.80 almost hitting the GHS 8 mark.

This is per checks at some forex bureaus and commercial banks in the country.

The cedi’s depreciation has been largely attributed to the uncertainty about Ghana’s fiscal outlook despite interventions by the Bank of Ghana.

Lack of confidence in the Ghanaian economy by some investors has fueled the selling of some of the country’s international bonds, while demand for the dollar for imports keeps rising.  

Due to this, the cedi has depreciated by a little over 5% to the dollar and still ranks as the second worst performing currency on the African continent so far this year.

The situation could compel the Central Bank to introduce additional measures to contain the rapid fall of the local currency, though much work needs to be done by managers of the fiscal economy to reassure investors that revenue will be boosted, while the rising debt will be tamed.

Read: Central Bank takes on GHS 2.96 billion debt in auction of 14-day BoG bills

Databank Research had said in its 2022 Quarterly Outlook Report that, conditions that triggered the depreciation of the cedi in the last quarter of last year will persist until the first half of this year.

“The heightened uncertainty around Ghana’s fiscal outlook worsened the cedi’s woes in late-2021 after a hawkish policy tone in the US triggered a flight-to-safety by foreign portfolio investors in 3rd quarter of 2021. We expect these conditions to persist in half-year 2022 in addition to corporate import demand as Ghana’s economy rebounds. The low prospect of an early-2022 Treasury issuance on the international capital market also exposes the cedi to depreciation pressure in first-half of 2022,” it said.

If the value of the cedi does not improve, then businesses particularly manufacturers that depend on imports for production will have to revise their budget while prices of some goods on the market will go up because of import inflation. 

Exchange rates at forex bureaus and commercial banks