Pressure on cedi to ease as inflation saw sharp drop in November 2023

The significant decline in inflation in November 2023 is expected to ease the pressure on the cedi and improve market sentiments in the near term.

This is coming after the local currency remained stable against the dollar in the retail market last week.

A dollar traded at ¢12.23 on the retail market last week.

On the interbank rate, it traded at ¢11.64 to a dollar as of the close of business, on Monday, December 18.

Bank of Ghana Exchange Rates pic.twitter.com/SReLptC9i7

— Bank of Ghana (@thebankofghana) December 19, 2023

However, the cedi depreciated about 0.36% week-on-week against the pound on the retail market.

Inflation witnessed a significant decline in November 2023, dropping to 26.4% year-on-year from the previous month’s figure of 35.2% year-on-year, indicating cooling price pressures.

This is the fourth consecutive month of decline, primarily due to a sharp decrease in food inflation, which eased by 1260 basis points to 32.2%.

At the 42nd foreign exchange auction to the Bulk Oil Distribution Companies, the Bank of Ghana provided $20 million at a forward rate of ¢12.15 to a dollar.

Analysts expect the ease in inflation to boost market sentiment and consequently strengthen the cedi.

Meanwhile, the cedi has lost about 14% in value to the dollar in the retail market and 24% in the interbank market.