BY NADIA NTIAMOAH
The Ghanaian cedi has extended its depreciation against the United States dollar in both the interbank and retail foreign exchange markets over the past two weeks, reflecting persistent demand for foreign currency, rising energy costs and seasonal import pressures, even as the local currency records mixed performance against the British pound and the Euro.
Latest market figures indicate that the cedi weakened against the dollar in both segments of the foreign exchange market, while its performance against other major international currencies varied depending on the trading market.
The developments come as businesses and importers increase demand for foreign exchange ahead of the festive season, placing additional pressure on the local currency despite intermittent supplies to the market.
The cedi’s year-to-date depreciation against the dollar is now slightly above 11 per cent, underscoring the challenges facing the local currency as market participants assess the outlook for exchange-rate stability in the coming weeks.
On the interbank market, where commercial banks trade foreign currencies, the cedi depreciated by 1.42 per cent against the US dollar over the period under review, with the dollar selling at GH¢11.79. The local currency also weakened against the British pound, losing 1.29 per cent to trade at GH¢15.60.
However, the cedi recorded a modest improvement against the euro, appreciating by 0.35 per cent to close the period at GH¢13.20. At forex bureaus, the local currency depreciated by 1.45 per cent against the dollar, with the American currency averaging GH¢12.10.
The cedi, however, appreciated by 0.47 per cent against the British pound to close the period at GH¢15.80, while recording a 0.55 per cent gain against the euro to trade at GH¢13.65.
The differences between interbank and retail rates reflect conditions across the two segments of the foreign exchange market, where pricing may vary according to demand, supply and transaction costs. Despite intermittent foreign exchange supply, the cedi has continued to experience volatile price movements, with brief recoveries followed by renewed depreciation.
Market conditions have been influenced by increased import demand ahead of the festive season, when businesses typically require additional foreign currency to purchase goods for domestic consumption and resale.
Despite the recent depreciation, Databank Research expects foreign exchange support from the Ghana Gold Board (GoldBod) and interventions by the Bank of Ghana (BoG) to provide some near-term relief.
In its assessment, the research firm said spot-gold sales by GoldBod and central bank interventions could strengthen foreign exchange availability and trigger a temporary appreciation of the cedi.
Databank also suggested that the local currency could experience a brief period of relative stability lasting four to five days if the expected foreign exchange inflows materialise. However, the firm cautioned that any sustained appreciation would depend on whether the additional foreign exchange supply could adequately absorb seasonal import demand without undermining the Bank of Ghana’s objective of accumulating international reserves.
Looking ahead, Databank Research expects the US dollar to trade within a relatively wide range of GH¢11.60 to GH¢12.10 against the cedi.
The firm identified GH¢12.00 as a likely near-term ceiling under its baseline outlook, although it warned that risks remain tilted towards further nominal depreciation.
According to the assessment, the cedi could face renewed pressure if energy costs and import demand increase faster than foreign exchange support becomes available.
