Dr Ernest Addison
THE PERSISTENT pressure experienced by the local currency in the third quarter, which saw it depreciate more than 4 percent, has started to ease.
The cedi weakened slightly this week against the dollar, trading at 6.05 compared to 6.04 at last week’s close though.
AZA Finance, Africa’s largest non-bank currency broker by trading volume at over $1 billion annually, which gave the projection, stated “As we move into the fourth quarter, the syndicated $1.5 billion cocoa loan should start being disbursed, which in turn should prevent the cedi from experiencing the same scale of weakness seen in the previous quarter.”
It mentioned that “Against that backdrop, we expect the cedi to maintain these levels in the near term.”
The Cedi depreciated against the dollar last week, sliding to 6.04 from 6.02 from the previous week’s close, with dollar demand continuing to outweigh supply as economic activity increased in the country.
A $75 million foreign exchange auction recently gave the local currency a temporary reprieve before the increased dollar demand resumed the pressure.
Available data as at September 22, 2021 shows that the Ghana Cedi recorded a depreciation of 1.8 percent against the US dollar, compared with a depreciation of 3.0 percent for the same period of 2020.
The Ghana cedi also depreciated by 1.6 percent against the Pound Sterling but appreciated by 2.7 percent against the Euro over the same period.
Meanwhile, Dr Ernest Addison, Governor of the Bank of Ghana, speaking to journalists after the 102nd monetary policy committee (MPC) meeting, said the Ghana Cedi has performed strongly with a year-to-date depreciation of 1.8 percent.
“The country’s higher sovereign spread has not shifted foreign investor behaviour as net monthly purchases of securities on both the debt and equity markets remain relatively favourable. In the outlook, rising interest rates in advanced economies on account of tapering may pose some risks. However, the strong reserve build-up and foreign exchange inflows from the recent SDR allocation and the expected syndicated cocoa loan proceeds should help to cushion currency pressures in the near-term.”
BY Samuel Boadi