Cedi Depreciation: Local Currency Continues Poor Performance Against US Dollar And Other Foreign Currencies

Cedi Depreciation: Local Currency Continues Poor Performance Against US Dollar And Other Foreign Currencies

  • The US dollar is trouncing the Ghana cedi as rates released by both the BoG and forex bureaus show the local currency is depreciating rapidly
  • On January 16, 2023, $1 was selling for over GH¢13 at forex bureaus although the interbank rates quote slightly lower rates
  • Due to the depreciation, fuel prices are expected to go up between 5% and 9% in the next pricing window, that is from January 16 to January 31

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The Ghana cedi has maintained its downward spiral against the US dollar on January 16, 2023, with $1 selling for over GH¢13 at forex bureaus.

Forex bureaus in Accra are trading the Ghana cedi at a buying price of GH¢12.50 for $1, and a selling price of GH¢13.20 for $1.

Meanwhile the interbank forex rate approved by the Bank of Ghana for January 16, 2023 shows that the Ghana Cedi is trading against $1 at a buying price of GH¢10.3305 and a selling price of GH¢10.3409.

Ghana cedi is still falling against the US dollar according to both BoG and forex bureau rates.
The January 16, 2023 interbank rates released by the BoG (M) shows the cedi is falling against the US dollar. Source: UGC: Getty Images, Twitter/@thebankofghana
Source: UGC

Just 24 hours earlier, the BoG backed interbank rate quoted a buying price of GH¢9.0402 for $1 and a selling price of GH¢9.0492 for $1.

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Also, on Monday, January 16, the interbank rate shows that the British Pound was trading at a buying price of GH¢12.6115 for £1 and a selling price of GH¢12.6252 for £1.

Compared to Sunday, January 15, 2023, the Pound Sterling was trading at a buying price of GH¢10.9974 for £1 and a selling price of GH¢11.0102 for £1.

But at forex bureaus the rates are much higher.

One British pound is being bought at a rate of GH¢14.70 and sold at a rate of GH¢15.70 on the forex market.

Against the Euro, forex bureaus are buying trading at a buying rate of GH¢12.80 for €1 and sold at a rate of GH¢13.80 for €1.

Haruna Alhassan, a finance expert and a fellow of civil society organisation Centre for Social Justice (CSJ), told YEN.com.gh on January 16, 2023 that the cedi fall in the last couple of weeks is a correction of the rapid rise in December 2022.

“It is also reflective of the challenged macroeconomic situation we find ourselves in,” he added.

He also surmised that government’s handling the debt restructuring programme is another trigger for the cedi's poor performance against the dollar.

“The uncertainty surrounding the ongoing debt restructuring will further dampen confidence in our recovery efforts or the lack of it,” he told YEN.com.gh.

The cedi’s fall projected to increase cost of petroleum products

Meanwhile, the depreciation of the Ghana cedi against the major trading currencies have been cited as the reason fuel prices have been projected to go up this week.

According to the Institute for Energy Security, fuel prices are expected to go up between 5% and 9% in the next pricing window, that is from January 16 to January 31, 2023.

The IES blames a 9.8% depreciation of the cedi over the last two weeks for the projected increase in the price of fuel.

High cost of fuel is a major driver of high inflation in Ghana.

Ghana Cedi Backsliding To Old Ways As It Records Steady Fall Against Dollar

YEN.com.gh reported a week earlier that it‘s not been looking too good for the cedi this year as it has been depreciating constantly against the dollar since the first day of 2023.

Bank of Ghana's interbank rate shows that the local currency was trading against the dollar at a selling price of GH¢9.0092 for $1 and at a buying price of GH¢9.0002 to $1.

Forex bureaus in Accra are quoting higher selling and buying prices for the dollar but the steady depreciation has also prompted fears that the old days of rapid depreciation is upon Ghanaians again.

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Source: YEN.com.gh

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