The relative strong performance of the cedi this year has been largely attributed to the Bank of Ghana’s intervention in the forex market and diversified exports market, rather than a weaker US dollar.
Bloomberg reported that the dollar’s historical position as the global reserve currency is in jeopardy because of steps the U.S. has taken to save its economy during the Covid-19 pandemic.
But Currency Analyst, Courage Boti of Databank Research explains to Joy Business that multiplicity of factors have rather facilitated the stronger performance of the cedi compared to previous years.
According to him, most countries dependent on oil have seen their external balances grow weaker during this COVID period, hence the plummet in their currencies.
Citing some African countries and comparing them to Ghana, he said Ghana is doing well.
“You see countries like Nigeria, their year-to-year has depreciated by close to 18 percent. The countries like South Africa at some point had depreciated by 23 percent. Currently Zambia is close to 30 percent depreciation against the USD”, he said.
“And you compare that to Ghana’s 2.93 percent depreciation, it tells you that the impact of diversification has been very great in this whole performance and you saw that in the half-year data Bank of Ghana put out there”, he further pointed out.
He emphasized that Ghana did relatively well though overall export was not great.
“Yes our overall [Ghana] export value is not as great, the growth is not as great and then import has reduced somewhat. It could have been worse but for the rally in gold prices and the increased volume for gold and cocoa”, said Mr. Boti
The cedi has since this year lost about 0.83% to the dollar on the retail market but depreciated by about 2.8% on the interbank market.
Comparing cedi to other SSA currencies
Ghana’s cedi is the eight best performing currency on the African continent despite starting the year as the best performing currency in the first two months.
It is, however, second in the ECOWAS sub-region, behind the CFA franc, among currencies tracked by joy Business.
The CFA franc, used by eight ECOWAS countries, is the best performing currency on the African continent with an appreciation of 5.69% against the US dollar .
It is followed by the Moroccan dirham (4.03%), Tunisian dinar (2.39%) and Egyptian pound (0.70%) which have all increased in value against the American currency year-to-date.
Forecast
Based on the current trend, the cedi is expected to end 2020 with a year-to-date depreciation of less than 5.0%. This would be however better than the 8.33% loss over the same period last year.
Latest Stories
-
T-bills auction: Government to borrow GH¢3.36bn on July 3, 2025
45 seconds -
Education system failure fuelling students indecent dressing – Wonder Madilo
3 minutes -
Telecel Ghana Foundation sweeps 4 honours at CSR & Sustainability Leadership Awards
11 minutes -
Passenger arrivals at KIA dip by 10.3% – BoG
13 minutes -
Malta Guinness ignites a movement with the launch of it We Move campaign
22 minutes -
GSS launches national in-depth business data collection after nationwide training of field officers
24 minutes -
Engage Now Africa unveils new building for Ayagitam Primary School at Chiana
32 minutes -
Draft VAT reform to be ready by September 2025 – GRA
35 minutes -
Ablekuma North polls: Akua Afriyie rejects rerun
37 minutes -
Liverpool star Diogo Jota killed in car crash
39 minutes -
Dr Owusu Nyarko-Boateng: New data bundle price and its unlimited opportunities
46 minutes -
Recruitment into Ghana Armed Forces will be merit-based, not for cash – Defence Minister
56 minutes -
24-hour Economy: Labour laws to be revised to accomodate shift system – Haruna
1 hour -
GITW 2025: Experts call for smarter approach to infrastructure development
1 hour -
24-hour economy: GIPC Act to be revised to include strategic incentives – Haruna
1 hour