Cedi and dollar notes
The cedi's downward spiral against the US dollar persisted as it reached GH¢14.18 on the retail market, despite the Bank of Ghana's recent sale of $20 million to Bulk Oil Distribution Companies (BDCs) in its 51st auction.
According to a Joy Business report, this marks a 13.45% depreciation of the local currency against the greenback so far in 2024, positioning it as one of the continent's worst-performing currencies.
At the start of the week, the cedi opened trading at GH¢14.05 against the dollar, but even with the anticipated impact of the BoG's auction, corporate forex demand pressures continue to exert strain on the local unit.
Notably, the cedi also faced significant losses against the euro and the pound.
However, there is hope that a deal with Eurobond holders, coupled with expected inflows from the International Monetary Fund and other multilateral sources, could alleviate the cedi's woes.
Since February 2024, the cedi's depreciation has been swift, fueled by investor apprehensions over Ghana's debt restructuring progress and the enduring strength of the US dollar.
Despite the rejection of a proposed debt deal by the IMF in April 2024, Finance Minister Dr. Mohammed Amin Adam remains optimistic, suggesting that significant progress has been made, potentially leading to a debt agreement by mid-2024.
Fitch Solutions anticipates increased investor confidence in Ghana's economy and policymaking processes, which could bolster foreign exchange inflows and strengthen the cedi in the latter half of 2024.
Last week, the Central Bank's sale of $13 million failed to halt the cedi's decline, with the currency shedding 0.90% week-on-week against the dollar on the retail market. Similarly, it trimmed 1.32% and 1.54% against the pound and the euro, respectively.