- The Minister of Finance, Ken Ofori-Atta, has raised concerns about the rate of the cedi's depreciation
- He stated that Ghana's foreign reserves could be in danger due to the high proportion of local bonds held by non-resident investors
- The cedi stands at GHC5.514 per dollar but was valued at GHC5.296 at the beginning of March 2020
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The Minister of Finance, Ken Ofori-Atta, has expressed worry about the depreciation of the cedi as the coronavirus continues to affect economies.
According to him, emerging market sentiments have led to a capital flight and the high proportion of local bonds held by non-resident investors which could lead to a strain on Ghana’s foreign reserves.
YEN.com.gh understands that non-resident investors hold about 25% of the local bonds.
READ ALSO: Economic growth could have been 6.8% and 6.4% in 2020 and 2024 without COVID-19 - Report
The coronavirus has also been identified as a major reason behind the recent fall of the cedi.
This comes after the local currency made some important gains against major trading currencies at the beginning of the year 2020.
Per a report by thebftonline.com, the cedi appreciates by 4.5% by the end of February but experienced a downslide to 3.9% from the beginning of March to April 21, 2020.
This has been tied to the fall in exports, capital flight and high demand for the United States dollar in recent times.
The cedi, which is now trading at GHC5.514, was valued at GHC5.296 at the beginning of March 2020.
The cedi has therefore appreciated by just 0.33 against the dollar from year-to-date.
It has been projected that it could depreciate if demand for forex continues to increase and the COVID-19-induced fall in exports continues.
Meanwhile, YEN.com.gh has learned that Moody’s, an international rating agency, has downgraded Ghana’s economic outlook from positive to negative.
The firm, however, maintained the country’s long-term local and foreign currency issuer and foreign currency senior unsecured bond ratings at B3.
Information available shows that the outbreak of the coronavirus is a key reason for the downgrade.
The COVID-19 has also resulted in a significant decrease in tax revenue and increased the chances of systematic risks.
READ ALSO: COVID-19: Ken Ofori-Atta urges China to consider debt reliefs for Africa
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