Cedi depreciates by 2.6% to dollar in almost 11-months of 2021 – Bank of Ghana says

Data from the Bank of Ghana has revealed that the Ghana cedi has depreciated by 2.6% in almost 11 months of this year, heading towards a record performance.

This is compared with 1.7% depreciation in the first 7-months of 2021.

The Central Bank pegged the rate of the cedi to the dollar at ¢5.91, though it is trading at about ¢6.26 on the interbank forex market.

However, the rate of depreciation of the cedi indicates that the local currency will stay within research institutions and analysts forecast for this year, as there is about six weeks more to end the year.

Indeed, the fall in the value of the cedi by 3.9% to the dollar the whole of last year, made it the lowest rate of depreciation in the history of the Ghanaian economy.

According to the November 2021 Summary of Economic and Financial Data, the cedi depreciated by 1.8% and 2.4% in September 2021 and October 2021 respectively.

Analysts have said that the Ghana cedi will record relative stability to the dollar for the last quarter of this year, despite expected pressures during the Christmas period whereby traders will be or have been importing goods to sell. This is because the Central Bank has adequate reserves to take care of an anticipated pressure/s on the cedi.

Senior Economic Analyst at Databank Research, Courage Martey, earlier said that the cedi is well anchored despite some anticipated shocks.

“As we heard into the final quarter of 2021, we are quiet assured of continued relative stability but with a depreciation that will occur at a controlled or modest pace because already we have a strong reserve buffer in excess of five months of import cover. And from October [2021], we should start to see the tranche disbursement of the $1.5 billion Cocoa Syndicated facility which will strengthen the cedi to see out the rest of this year. So generally, we are very positive about the cedi.” He stated

Cedi forecast to end year within ¢6.14 and ¢6.32 to dollar

Fitch Solutions, research arm of ratings agency, Fitch, and Databank Research, earlier on forecast slightly different end year rate of the cedi to the dollar.

Whilst Fitch Solutions projected ¢6.32 to a dollar by the end of the year, Databank Research predicted between ¢6.14 and ¢6.25.

Fitch attributed a rebound of the global economy which will stimulate economic activities, as the rationale behind its end-year cedi to dollar rate of ¢6.32, a little above 4% depreciation.

Databank on the other hand said the recent portfolio-induced pressure tampered with its earlier optimism. However, it believes the cedi should remain supported by the gross forex reserves of about $10.99 billion.