The edgy performance of the local currency continues unabated, as the cedi has a year-to-date August 22 depreciation of 6.4 percent on the interbank market,
This figure is worse when compared to the 4.1 percent recorded within the same period last year. It is also a poorer result than the 4.7 percent depreciation recorded in the entire 2017.
The cedi began the year at a relatively stable position, recording just under 0.3 percent depreciation in the first quarter.
The second quarter saw a 2.59 percent depreciation. However, with a little over a month for the third quarter to end, the cedi has surpassed its cumulative performance of the first two quarters; deprecating by about 4 percent between July and August 22, 2018.
The currency’s performance on the forex market proper somehow reflects the interbank market performance, with Bloomberg – which monitors forex trade at selected key banks in the country, indicating a 6.9 percent YTD depreciation.
Much as the cedi has had its own troubles against the greenback, recent global developments such as a hike in the US federal reserve’s interest rate have led to a much stronger dollar which has seen the local currency struggling.
In addition to the cedi having to deal with external pressures, market analysts say the domestic market reaction to the MTN IPO launched in May – which said the GH¢3.48billion to be raised will be used to settle shareholders who mostly reside outside the country – compounded the demand for dollars.
Commenting on the cedi’s performance, RMB Markets researchers wrote yesterday, the US$/GH¢ pair opened today’s trading session at 4.8375/4.8650, from Wednesday’s closing levels of 4.8400/4.8800 in the interbank.
According to RMB, the marginal drop in the currency was mainly on the back of the ease in offshore sell-off across emerging and frontier markets globally. The market expects the central bank’s intervention to improve supply in the currency market, so as to meet persistent demand from corporates and commercial importers, RMB said.
More liquidity, other measures
The Director, Financial Markets Department of the Bank of Ghana, Steve Opata, said the bank over the months has made sure there is enough liquidity to cater for any shortfall that would lead to the cedi coming under pressure against the dollar.
Mr. Opata, who spoke to the B&FT, revealed that the central bank is increasing its forex supply to the market. The Eurobond issued in the second quarter, he said, has provided additional forex to the central bank that can be called upon to help the forex market.
He maintained that the central bank is monitoring keenly the current happenings, both externally and domestically, and will not hesitate to use its monetary policy tool in bringing desired change to the local market.