The Ghana cedi is expected to remain relatively stable against the US dollar this week as risk-off investor sentiment cools off.
Demand for US dollar last week outstripped supply despite a slowing inflation. This caused the cedi to fall to levels seen in the second quarter of 2023.
The Bank of Ghana provided $20 million in the 36th bi-weekly foreign exchange auction to the Bulk Oil Distribution Companies, but this was insufficient to slowdown the rising corporate demand.
The local currency lost marginally (0.46%) to the US dollar last week. Conversely, it gained 0.17% the pound, but remained stable against the Euro.
So far this year, the cedi has lost about 11.6% to the dollar in the retail market and about 22% to the American greenback on the retail market.
The Ghana Statistical Service (GSS) reported a significant drop in inflation for August23 to 40.1%. The cooling print was attributed to decreased food inflation, which dropped from 55% to 51.9%.
Additionally, Fitch Solutions has revised its forecast for the Ghana cedi for the end of the year 2023, predicting it will reach ¢11.40/$ instead of the initial forecast of ¢12.40/$.
This analysts anticipate the cedi to move gently as risk-off investor sentiment cools off.