Despite an improved performance of the cedi to the dollar last week, depreciation risks persist.
According to the Weekly Currency Report by Databank Research, demand pressures exist.
“We reckon the improved FX supply to cushion the Ghana cedi. Depreciation risks persist with demand pressures still sustained, but we expect these pressures to ease when the $1.3 billion COCOBOD syndicated loan comes through.”
The cedi gained 2.02% against the dollar, 2.98% against the pound, and 1.52% against the euro, trimming its Year-To-Date loss to 34.38% (September 2, 2022) against the American currency.
This was on the back of the $750 million Afrexim loan bolstering foreign exchange (FX) supply.
“The local unit strengthened against the greenback last week on the back of the $750 million Afrexim loan bolstering FX supply. Last week, the Bank of Ghana conducted a forex auction for the BDCs [Bulk Oil Distribution Companies], allotting $50 million at a 30-day forward rate of 9.7554/US dollar (vs 8.8192/US dollar in the previous auction)”.
It is however unclear whether the trend will continue this week. Despite the demand pressures, the report pointed out that improved FX supply will cushion the cedi.
Again, it expects these pressures to ease when the $1.3 billion COCOBOD syndicated loan comes through next month.
Meanwhile, the local currency is still ranked among the worst performing currencies in the Sub Saharan Africa region.
However, the Zambian kwacha has appreciated by 8.07% to the dollar since January 1, 2022.
SOME CURRENCIES AND THEIR DEPRECIATION RATE AS OF SEPTEMBER 2, 2022
| CURRENCY | YEAR-TO-DATE (%) | RANKING |
| Ghana cedi | -34.2 | 1st |
| Malawi kwacha | -20.47 | 2nd |
| Egypt pound | -18.23 | 3rd |
| Morocco dirham | -12.34 | 4th |
| Cote d’lvoire CFA | -11.65 | 5th |
| Tunisia dinar | -9.53 | 6th |
| Botswana pula | -9.39 | 7th |
| South Africa rand | -8.22 | 8th |
| Namibia pound | -8.05 | 9th |
| Uganda shilling | -7.01 | 10th |
| Kenya shilling | -5.81 | 11th |
| Mauritius rupee | -3.07 | 12th |
| Nigeria naira | -2.72 | 13th |
| Tanzania shilling | -0.33 | 14th |
| Zambia kwacha | 8.07 | 15th |
Source: Myjoyonline