The Ghana cedi continued to lose value against the US dollar in both the interbank and retail foreign exchange markets over the past two weeks, while recording mixed performance against the pound and the euro.
In the interbank market, the cedi depreciated by 1.42% against the US dollar and 1.29% against the British pound, trading at GH¢11.79 and GH¢15.60, respectively.
However, it appreciated by 0.35% against the euro, closing at GH¢13.20.
A similar trend was recorded in the retail market, where the cedi weakened by 1.45% against the dollar, averaging GH¢12.10.
It gained 0.47% against the pound and 0.55% against the euro, trading at GH¢15.80 and GH¢13.65, respectively.
Despite occasional increases in foreign exchange supply, the cedi continued to experience sharp price movements, with brief recoveries amid sustained demand for imports ahead of the festive season and rising energy costs.
Databank Research expects gold sales by the Ghana Gold Board (GoldBod) and interventions by the Bank of Ghana (BoG) to offer some short-term support to the local currency.
“Looking ahead, we expect GoldBod’s spot-gold sales and BoG interventions to provide near-term support, potentially triggering a sharp appreciation surprise and a brief 4 to 5-day period of stability.
“However, sustained appreciation will depend on whether spot inflows can soften seasonal import demand without compromising the BoG’s [Bank of Ghana] reserve-accumulation target”, Databank Research said.
The research firm, however, warned that the cedi could continue to face pressure if rising energy costs and import demand outpace the supply of foreign exchange.
“On balance, we expect US dollar/GHS [US dollar/Ghana cedi] to trade within a wide GH¢11.60 to GH¢12.10 band, with GH¢ 12.00 as a likely near-term cap, although risks remain skewed towards nominal depreciation if energy costs and import demand outpace FX [foreign exchange] support”.
Meanwhile, the cedi began the week with a marginal appreciation, trading at GH¢12.10 to the US dollar at forex bureaus.
Despite the slight recovery, the local currency’s year-to-date depreciation remains above 11%.
