19th July 2024

Dr Ernest Addison, Bank of Ghana governor

The Ghanaian local currency has appreciated by about 0.6 per cent to the US dollar since the beginning of this year, the Bank of Ghana (BoG) has indicated in its March 2021 Summary of Economic and Financial Data.

This confirms the strong performance of the cedi since last year. The cedi achieved a record 3.9 per cent depreciation to the world’s most important currency last year.

The central bank’s figures put the trading value of the cedi to the dollar at GHC5.727. The cedi’s 2020 performance made it one of the best performing currencies in Sub Saharan Africa. Its impressive performance also made it the best since 2017 when it depreciated by only 4.88 percent. At the forex bureau, the rate of depreciation was even lower at 2.2 percent.

Some analysts believe the cedi benefited from a myriad of factors including the Central Bank’s Forex Forward Auction and the diversified exports.

For the Senior Economic Analyst at Databank, Courage Kingsley Martey, “this sets a favourable entry into 2021. The expectations are for the GHC to remain well supported in Q1-2021(quarter one 2021) by the improved regulatory oversight, enhanced FX (foreign exchange) forward allotments and continued improvements in risk appetite of non-resident investors.”

For the euro, the cedi has appreciated by 3.5 percent but declined in value by 1.3 percent to the British pound.

Cedi forecast

Many organisations have projected a lower depreciation of the cedi to the dollar this year.

For instance, Databank Research is predicting a GHC6.18 to the dollar end year rate in 2021. This will be 3.02 percent depreciation and lower than the 3.9 percent depreciation recorded last year.

“The Ghana cedi appears well supported for another year of relative stability but not without pressure points. We forecast full year 2021 depreciation range of 3.02 percent – 6.18 percent,” BoG said in its 2021 Economic Outlook Report.

Factors that could support the Ghanaian local currency this year include the planned Eurobond issuance and a modest recovery in oil export receipts without significant loss in gold revenue.

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