Dollar strengthens against cedi due to World Cup

Two weeks into the 19th edition of the World Cup, the local currency has been under immense pressure from the major foreign currencies, forcing it to depreciate on the market.

Even before the World Cup began on June 11, the Ghana cedi had not fared better against the dollar and the pound Sterling, especially from the beginning of this month.

As at the close of trading on Friday, it had depreciated by 0.13 and 0.54 percent respectively against the dollar and the pound.

A Gold Coast Securities analysis maintained that the decline in the Ghana cedi for some time now against the dollar can be attributed to the activities of soccer fans.

According to the research, the insufficient supply of South African rand in Ghana to meet the demand of football enthusiasts travelling to watch the World Cup has caused demand for the dollar to rise, as fans opt for the greenback as a preferred replacement for the South Africa rand.

Ghana qualified into the 1/16 stage of the World Cup and even though some Ghanaian fans sponsored by the government returned home Friday, some other Ghanaians have travelled to South Africa to witness the Black Stars vrs the United States of America match.

It stated that an increase of 3.01 per cent in the value of the rand against the cedi and the appreciation of 0.16 per cent in the value of the dollar/cedi exchange rate since June 1, 2010 is evidence of that.

The pound also gained 1.23 percent against the cedi two weeks ago, reducing its annual depreciation against the local currency.

A better-than-expected U.K employment data, which saw the International Labour Organisation unemployment rate fall by 7.9 per cent, assured investor's of a growth in the recovery process and also boosting demand for the British pound.

However, the fundamentals of the Euro zone remain weak and therefore the outlook for the 16-nation currency still remains doubtful.

Last week's upward adjustment by the single currency saw its year-to-date performance against the cedi improve significantly from a depreciation of 15.92 percent in the previous week to 13.86 per cent in the period under review.

By the close of trading last Friday on the inter-bank market, the local currency was buying at GH¢1.414 and selling for GH¢1.433 against the dollar. It was trading between GH¢2.110 and GH¢2.140p to the pound and was going for GH¢1.744 and GH¢1.767 against the Euro. One Ghana cedi was quoted between 371 and 376 CFA.