The Ghana cedi has lost about 3.66% in value to the US dollar since the beginning of 2024.
The local currency lost ground last week despite improved market liquidity. This came on the back of corporate demand and stronger-than-expected January 2024 inflation.
Though the depreciation pressures have eased and liquidity has also improved, the local currency still lost 0.40% in value week-on-week to the American greenback last week.
It also shed 0.16% and 0.19% against the pound and the euro on the retail market.
After depreciating in the first two trading sessions, the Bank of Ghana’s $15 million spot market provision and the $20 million auctioned to the Bulk Oil Distribution Companies helped hold the cedi steady at GH¢12.58 to the dollar until the week’s close. However, the local currency is going for GH¢12.75 to the dollar today February 20, 2024.
The US January 2024 inflation moderated to 3.1% from 3.4% in December 2023. Analysts anticipate this may renew market uncertainties and strengthen the dollar as the market anticipates the Federal Reserve to hold the policy rate in the next meeting.
They also believe this may introduce depreciation pressures on emerging market currencies, including the cedi in the near term.
However, looking at the market this week, they believe limited market activity and potential BoG’s foreign exchange market intervention will help reduce depreciating pressures on cedi week.
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