Cedi not among best performing currencies in Africa

• Posted on November 10, 2016
• by Nana Kwesi Coomson
• Comment

Despite its relative stability this year, the Ghana cedi is not among the top 10 performing currencies in sub Saharan Africa, Business Finder’s checks reveal.

This is also contrary to President Mahama’s assertion that the local currency which has lost 4.45 per cent against the US dollar at the close of business Friday November 4, 2016 is among the top performing currencies on the African continent.

Currencies such as Kenya shilling (0.2 percent) appreciation against the US dollar since January 1, 2016; Mauritius rupees (0.53 percent) appreciation against the American currency; Zambian Kwacha (7.0 percent) appreciation against the US dollar; the Cape Verde escudo (3.4 percent) appreciation against the ‘green back’ and Ivorian CFA (4.9 percent) against the American currency are all doing better than the cedi in 2016.

Others such as Lesotho loti (5.0 percent), Uganda shilling (0.3 percent), South African Rand (2.3 percent), Namibia dollar (6.0 percent), Morocco dirham (0.79 percent) and Swaziland lilangeni (6.2 percent) appreciation against the US dollar are all performing better than the Ghana cedi.

The local currency is however doing better than the Nigerian naira (-37.10 percent) and Egypt pounds (-12.01 percent) depreciation against the American currency.

Presently, the cedi is trading at about 4.05 percent on the interbank market. Whilst most forex bureau are selling the cedi at GH¢4.07 for one US dollar, the Bank of Ghana website quotes GH¢3.96 for one US dollar.

Ecobank Research had earlier predicted that the local currency could trade between GH¢3.97-4.10 to the US dollar between August and September 2016 despite the IMF assisted economy.

In its Ghana Economic Strategic Report Quarter 3, the renowned research institution based in London said the local currency will remain acute due to robust import demand albeit falling cedi liquidity. It also added that “Treasury-bill yields could remain around 22-25 percent as investor uncertainty over Ghana’s imbalances hold prices down”.

On inflation, it said that inflation was likely to remain in high double digits in the third quarter of 2016.

From January to September 15, 2016, the Ghana cedi cumulatively depreciated by 4.1 percent compared with 16.0 percent depreciation in the same period of 2015.

The local currency ended the first half of this year with a depreciation rate of 3.04 percent against the US dollar.

Meanwhile, some pressure on the local currency is expected to be witnessed during the Christmas festivity. Some currency dealers who spoke to this paper indicated that the cedi was likely to end the year at about GH¢4.15 against the US dollar.

By Augustine Amoah