Cedi makes average depreciation loss of 22.9% against dollar, pound and euro
The Cedi, per latest data released by the Bank of Ghana (BoG) in its March 2023 Summary of Economic and Financial Data, recorded an average depreciation loss of 22.9% against three major trading currencies (dollar, pound and euro).
The Ghanaian cedi has been experiencing a decline in its value against major currencies, with the Bank of Ghana putting its depreciation against the US dollar at 22.1% as of March 2023. This is similar to the depreciation loss of 22.1% recorded by the local currency against the dollar in February 2023. In January 2023, the depreciation rate was 20.6%, which was revised from an earlier estimate of 19.1% depreciation.
According to the Bank of Ghana’s Summary of Economic and Financial Data, the cedi was pegged at GHS 11.104 to one US dollar on the interbank market in March 2023. The local currency also lost 23.5% and 23.1% of its value against the pound and euro, respectively, in the same month.
Despite the cedi’s poor performance against major currencies, it appears to be faring slightly better on the forex or retail market, where it is trading at around GHS 12.50 to one US dollar. However, some analysts have projected a mixed performance for the cedi against the US dollar this week, citing increased demand for the American greenback.
While the Finance Minister’s recent visit to China for debt restructuring talks and the government’s renewal of coupon payments may improve market sentiment, these factors may not be enough to cause significant gains for the cedi against the US dollar. In fact, the local currency lost 0.20%, 1.16%, and 0.95% of its value against the dollar, pound, and euro, respectively, last week, due to strong corporate demand.
The cedi’s depreciation against major currencies is likely to have a significant impact on the Ghanaian economy. Importers and businesses that rely on imports for their operations may struggle with higher costs, which could lead to inflationary pressures. Additionally, the decline in the value of the cedi may deter foreign investors, which could have negative implications for the country’s economic growth.
To mitigate the impact of the cedi’s depreciation, the Bank of Ghana may need to implement measures such as tightening monetary policy or increasing foreign currency reserves. The government may also need to focus on implementing policies that promote export growth and reduce the country’s reliance on imports.
The cedi’s poor performance against major currencies is a cause for concern for Ghana’s economy. While there are some factors that may improve market sentiment, the cedi’s recent losses suggest that significant gains against the US dollar may not be imminent. The Bank of Ghana and the government will need to take appropriate measures to address the issue and mitigate the impact on the economy.
