The depreciation of the cedi to the dollar continued unabated as the local currency hit GH¢14.18 to the American greenback on the retail market.
This is coming despite the Bank of Ghana selling $20 million to the Bulk Oil Distribution Companies (BDCs) in the 51st auction.
The local unit has so far lost about 13.45% to the US dollar, making it one of the poor-performing currencies on the African continent in 2024.
The local unit began this week, selling at GH¢14.05 to the dollar at most forex bureaus.
Though analysts expected this auction to soak up some forex demand on the market, the prevailing corporate forex demand pressures continue to weaken the local unit.
The local currency also lost major ground against the euro and the pound respectively.
However, if Ghana gets a deal with its Eurobond holders and the expected inflows from the International Monetary Fund and other multilateral, the cedi woes may be reversed.
The cedi has been on a rapid depreciatory trend since February 2024, caused by investor concerns over Ghana’s progress of restructuring its commercial debt, as well as the sustained strength of the US dollar.
London-based Fitch Solutions had said that although a proposed debt deal with international bondholders was rejected by the International Monetary Fund in April 2024, Ghana’s Finance Minister, Dr. Mohammed Amin Adam was optimistic that “significant progress” has been achieved, which “suggests to us that reaching a debt agreement by mid-2024 should be feasible”.
“We expect that this will boost investor confidence in Ghana’s economy and policymaking processes, leading to increased foreign exchange inflows and a consequent strengthening of the cedi in half-year 2024”, Fitch Solutions added.
Last week, the Central Bank sold $13 million on the spot market though it could not keep the local unit afloat as the cedi ended the week, shedding 0.90% week-on-week to the American greenback on the retail market.
The cedi also trimmed 1.32% and 1.54% week-on-week against the pound and the Euro on the retail market.