Ghana: Ghanaian cedi rebounds in September
September 16, 2015
In September, the Ghanaian cedi (GHS) appreciated against the U.S dollar, thus gaining some of what it had lost last month. On 4 September, the currency traded at 3.80 GHS per USD. The result was 1.69% stronger than on the same day of the previous month but still 2.0% weaker on an annual basis. The recent appreciation of the cedi reflects expectations of increased foreign inflows in the last quarter of the year as well as the government’s plans to reduce spending. Adding to that, the news that the IMF will disburse more money to the government eased demand pressure on the market, thus contributing to the appreciation of the currency. Nevertheless, the cedi has lost 19.3% of its value since the beginning of the year.
Last month, the cedi depreciated over 20.0% against the greenback due to increased pressure after the devaluation of the yuan in early-August. While the cedi’s rebound in September 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. Against this backdrop, on 14 September, the Bank increased its policy rate to a record-high level of 25.00%. 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