Ghana: Ghanaian cedi gains strength in October
October 14, 2015
In recent weeks, the Ghanaian cedi (GHS) has strengthened somewhat against the U.S. dollar. On 5 October, the currency traded at 3.71 GHS per USD. The result was 2.50% stronger than on the same day of the previous month but still 15.4% weaker on an annual basis. The cedi has lost over 15.0% of its value since the beginning of the year.
The recent appreciation of the currency reflects expectations of increased foreign inflows in the last quarter of the year as well as the government’s plans to reduce spending. The cedi strengthened considerably after the country concluded the sale of a USD 1.0 billion Eurobond earlier this month. Moreover, there is hope that the IMF will disburse more money to the government, which will in turn ease demand pressure on the market.
While the cedi’s appreciation in October has helped to pull down inflationary pressures, the Central Bank considers that inflationary pressures are still quite elevated, mainly due to the high volatility in the exchange rate market. The Bank has also declared that the robust interbank intervention will continue in the future in a bid to support the weak currency.
Author: Dirina Mançellari, Senior Economist