The cedi ended the month of February 2020 with an appreciation of about 5.75% to the US dollar on the interbank market. This is unlike in previous years where it depreciated, sometimes a rapid fall. The cedi also appreciated by 4.52% at the forex bureau.
This performance is supported by ongoing Bank of Ghana (BoG) interventions on the spot and forward markets coupled with weak importers demand for foreign exchange on the market. The foreign exchange supply-side was also supported by foreign portfolio investment flows to high-yield cedi securities.
However, in the last three trading days, there were some losses of the cedi against the dollar as foreign investors limited their risk exposures in the face of coronavirus spread across international borders. The renewed risk-off mode of foreign investors appears to have revived offshore portfolio demand for foreign exchange coupled with the thinning supply of foreign exchange.
Currency analyst with Databank Research, Courage Martey said “Despite the moderate rise in depreciation risks, the market appears confident that the BoG is well resourced with the recent US$3 billion Eurobond to support the cedi through any potential external shocks.
Presently, a US dollar can be bought for GHS5.29 on the interbank market and GHS5.37 at the forex bureau. The local Ghanaian currency ended the year 2019 with a depreciation rate of about 12.9% to the US dollar, based on data from the Bank of Ghana’s website. But has dramatically impressed this time around.
Meanwhile, the Deputy Managing Director of Société Générale Bank Ghana, Ernest Kuetche, has advised the government to continue what he calls prudent policies to ensure the cedi’s performance is sustained even beyond the election year.
According to him, further policies must be set in place to continue to keep the local currency stable against major trading currencies such as the US dollar. The local currency has witnessed a decline against major trading currencies but has currently appreciated about four percent in value against the dollar since the start of this year.
Ernest Kuetche said the government has already taken good measures and is the reason it has helped stabilize the cedi, stating that in 2019, the depreciation was quite significant and remarkably, the first two months of 2020 have seen some appreciation of the cedi.
He said this is overall a good stabilization and if the government continues in the same direction as the Bank of Ghana, there is no doubt things will continue to have a positive outlook.