Despite an improved performance of the cedi to the dollar last week, depreciation risks persist.

According to the Weekly Currency Report by Databank Research, demand pressures exist.

“We reckon the improved FX supply to cushion the Ghana cedi. Depreciation risks persist with demand pressures still sustained, but we expect these pressures to ease when the $1.3 billion COCOBOD syndicated loan comes through.”

The cedi gained 2.02% against the dollar, 2.98% against the pound, and 1.52% against the euro, trimming its Year-To-Date loss to 34.38% (September 2, 2022) against the American currency.

This was on the back of the $750 million Afrexim loan bolstering foreign exchange (FX) supply.

“The local unit strengthened against the greenback last week on the back of the $750 million Afrexim loan bolstering FX supply. Last week, the Bank of Ghana conducted a forex auction for the BDCs [Bulk Oil Distribution Companies], allotting $50 million at a 30-day forward rate of 9.7554/US dollar (vs 8.8192/US dollar in the previous auction)”.

 It is however unclear whether the trend will continue this week. Despite the demand pressures, the report pointed out that improved FX supply will cushion the cedi.

Again, it expects these pressures to ease when the $1.3 billion COCOBOD syndicated loan comes through next month.

Meanwhile, the local currency is still ranked among the worst performing currencies in the Sub Saharan Africa region.

However, the Zambian kwacha has appreciated by 8.07% to the dollar since January 1, 2022.

SOME CURRENCIES AND THEIR DEPRECIATION RATE AS OF SEPTEMBER 2, 2022

CURRENCYYEAR-TO-DATE (%)RANKING
Ghana cedi-34.21st
Malawi kwacha-20.472nd
Egypt pound-18.233rd
Morocco dirham-12.344th
Cote d’lvoire CFA-11.655th
Tunisia dinar-9.536th
Botswana pula-9.397th
South Africa rand-8.228th
Namibia pound-8.059th
Uganda shilling-7.0110th
Kenya shilling-5.8111th
Mauritius rupee-3.0712th
Nigeria naira-2.7213th
Tanzania shilling-0.3314th
Zambia kwacha8.0715th

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