Cedi Troubles Continue: Depreciates 21% to Dollar, Now at GH¢15.70 per Dollar

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The Ghana cedi lost 3.88% in value against the US dollar last week on the spot market, increasing its year-to-date depreciation to 21.20%. This decline is attributed to the strengthening of the US dollar and renewed local corporate foreign exchange demand.

At the start of the week on June 18, 2024, the cedi remained stable, selling at GH¢15.70 at forex bureaus. The stability came despite the US Federal Reserve signaling just a single policy rate cut this year, contrary to market expectations of two cuts.

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This tighter monetary policy stance caused the American dollar index to surge by about 100 basis points week-on-week, putting additional pressure on the cedi against major trading currencies. The local currency also depreciated by 2.43% against the pound and 2.87% against the euro last week.

However, there was a positive development as the Government of Ghana and its official creditors agreed on a debt restructuring. This agreement is expected to pave the way for Ghana to receive a disbursement of $360 million, contingent on approval by the International Monetary Fund (IMF) board at their meeting scheduled for June 28, 2024.

Analysts believe this financial support will bolster foreign exchange buffers, improve FX liquidity, and help stabilize the weakening cedi in the near term.

Despite this, the cedi is expected to trade sideways this week due to the continued strength of the dollar and ongoing foreign exchange demand.

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