The Ghana cedi continues to struggle against major trading currencies, losing 3.88% in value to the US dollar in the past week.
The depreciation represents an increase in the cedi’s year-to-date devaluation to 21.20%.
According to a report from myjoyonline.com, the cedi’s depreciation briefly follows the strengthening of the US dollar and heightened local foreign exchange demand.
However, it started the week of June 18, 2024, unchanged, selling at GH¢15.70 to $1 at major forex bureaus.
As part of measures to strengthen the US dollar, the US Federal Reserve signalled a single policy rate cut this year, contrary to market expectations of two cuts.
The move has sent the US dollar back index soaring about 100 basis points week-on-week, causing the cedi to depreciate against it and other major trading currencies.
The local currency also declined by 2.43% against the British Pound and 2.87% to the Euro last week.
Despite its current performance, the Ghana cedi is expected to bounce back stronger as the Government of Ghana and its official creditors have reached an agreement on debt restructuring terms.
This agreement would ensure Ghana receives a disbursement of the next tranche of the IMF bailout, made up of $360 million.
Analysts also believe this will support foreign exchange buffers, improve FX liquidity, and help stabilize the weakening cedi in the near term.
Credit: ghanaweb.com