Bloomberg pegs Ghana’s depreciation rate at 4.05
The cedi is being classified as part of Africa’s worst spot returns
The Ghana cedi has come under intense pressure as the year comes to an end. According to Bloomberg, the cedi is classified among African currencies with the ‘Worst Spot Returns’.
It is now ranked 14th among 20 top African currencies tracked by Bloomberg after being the best performing currency in Africa in the first quarter of 2021.
This steep can be attributed to the increased corporate demand for the US dollar and the exit of the country’s bond by some foreign investors.
The cedi in recent times has succumbed to pressures from the market, losing more grounds to the dollar.
Bloomberg, however, put the depreciation of the cedi at 4.05%, though the Bank of Ghana data shows a lower decline in value of the local currency to the US dollar.
Calls are being made by the Bank of Ghana to heighten efforts to reduce the depreciation rate to facilitate a faster pace of fiscal consolidation for the economy.
Senior Economic Analyst with Databank Research, Courage Martey, tells Joy Business there hasn’t been any significant appetite for government securities after presenting the 2022 Budget.
“In fact, our gauge of foreign investor sentiment around the budget shows that a lot of foreign investors feel that a faster pace of fiscal consolidation is necessary. However, they feel the revenue expectations are ambitious, and for that matter, they are very cautious on the outlook for the FX [foreign exchange] exposure they will take if they come into the local market now.”
“So generally, the supply side is also subdued by the perceived risk to the outlook, and there is also elevated demand from corporate investors”, Mr Martey explained.
“Overall, the cedi is still under pressure and might likely continue to experience this pressure till the end of the year. But we believe that the Central Bank’s regular interventions on the spot and forward markets will be sufficient to prevent volatility. So that the depreciation pressures will continue to remain moderate till the end of the year”, he added.
Meanwhile, the Zambian kwacha is the best performing currency in Africa so far this year. The Nigerian naira is, however, 13th, whilst the South African rand is 19th with depreciation of 19.28%. Read Full Story
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