Cedi loses 1.4% against dollar as import demand pressures currency

The Ghana cedi weakened by more than one percent against the US dollar in both the interbank and retail foreign exchange markets over the past two weeks, pushing its year-to-date depreciation to slightly above 11 percent.

The local currency also lost ground against the British pound on the interbank market, although it recorded modest gains against the euro in both markets.

On the interbank market, the cedi depreciated by 1.42 percent against the dollar to GH¢11.79 and by 1.29 percent against the pound to GH¢15.60. It appreciated by 0.35 percent against the euro to GH¢13.20.

In the retail market, the currency lost 1.45 percent against the dollar, averaging GH¢12.10. It, however, gained 0.47 percent against the pound and 0.55 percent against the euro, closing the period at GH¢15.80 and GH¢13.65, respectively.

The performance comes amid persistent pre-festive import demand and higher energy costs, which continue to exert pressure on the foreign exchange market despite intermittent increases in dollar supply.

Databank Research expects foreign exchange sales by the Ghana Gold Board (GoldBod) and interventions by the Bank of Ghana (BoG) to provide temporary support for the cedi.

The research firm said the measures could trigger a short-lived appreciation and a period of stability lasting four to five days.

However, it cautioned that sustained gains would depend on whether foreign exchange inflows could meet seasonal import demand without compromising the central bank’s reserve-accumulation target.

Databank expects the dollar to trade within a range of GH¢11.60 to GH¢12.10, identifying GH¢12.00 as a likely near-term ceiling, although further depreciation remains possible if energy costs and import demand outpace foreign exchange support.

The cedi began the current week with a marginal recovery, trading at GH¢12.10 to the dollar at forex bureaux.

The outlook remains dependent on the strength of foreign exchange inflows relative to demand pressures.