Ghana: Cedi recovers some lost ground at the beginning of Q2
April 15, 2019
The Ghanaian cedi bounced back at the outset of the second quarter, after depreciating sharply in Q1. On 12 April, the cedi ended the day at 5.19 per USD, appreciating 6.4% over the same day in March. Nevertheless, it was still down 7.1% on a year-to-date basis and down 14.4% in year-on-year terms.
The prospect of Ghana exiting its four-year IMF bailout program, coupled with a surprise rate cut by the Central Bank in January, viewed as premature by some analysts, unsettled markets and weighed heavily on the currency in the first quarter. The Central Bank, constrained by targets set under the IMF program to sustain a certain level of international reserves, could not intervene to prop up the weakening currency. However, the sharp selloff, fueled by speculation, was short-lived as the currency rebounded at the outset of Q2. With the country now having exited the IMF program on 2 April and the Bank now being able to intervene in the currency markets, the cedi has recovered some of the losses incurred.
Author: Nihad Ahmed, Economist