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Cedi begins to recover after free fall

By Elorm Desewu

The Ghana cedi has begun to recover after it has depreciated against the major trading currencies since the beginning of this year.

But just last week, the Cedi appreciated against the greenback as the US$750 million loan from the African Export Import Bank (AFREXIMBANK) has hit the accounts of the Bank of Ghana (BoG).

The cedi is also expected to appreciate further in the wake of the first tranche of the annual cocoa syndication loan which would hit the accounts of the BoG next month.

Last week on the Interbank, Cedi was trading against the dollar at a buying price of 8.2284 and a selling price of 8.2366.

However, at a forex bureau in Accra, the dollar was being bought at a rate of GHC9.79 and sold at a rate of GHC9.98.

Against the Pound Sterling, the Cedi was trading at GHC9.5820 and a selling price of GHC9.5924. At a forex bureau in Accra, the pound sterling was being traded at GHC11.10 and sold at a rate of GHC11.60.

The Euro was trading at a buying price of GHc8.2867 and a selling price of GHC8.2950. At a forex bureau in Accra, Euro was being bought at a rate of GHC9.55 and sold at a rate of GHC9.85.

The cedi has dropped more than 38% this year making it the worst performing currency after Sri Lanka’s rupee among 150 economies tracked by Bloomberg.

“Ghana’s assets are facing pressure and this is common across high-yield emerging markets,” said Yvette Babb, a Netherland’s based fixed-income portfolio manager at William Blair International “The move, however, has been particularly pronounced in Ghana.”

Investors have dumped the cedi and the nation’s bonds this year as concerns about the impact of a global slowdown in demand for commodities such as cocoa have risen. Those movements fed an inflationary surge and pushed Ghana to begin talks with the IMF in July over an assistance package of as much as $3 billion.   

The Bank of Ghana earlier last month increased its benchmark interest rate by the biggest margin on record to 22% to slow the decline. A depreciating currency will add to the import bill of a country that purchases most of its fuel from abroad and has been struggling with inflation at the highest levels since 2003.

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