Stability of the Ghana Cedi against the Dollar to persist despite upcoming foreign exchange auction

The cedi is anticipated to maintain its stability against the US dollar in the coming week, primarily due to an upcoming foreign exchange auction for Bulk Oil Distribution Companies (BDCs).

Market analysts predict sustained corporate demand and potential offshore forex repatriation from coupon payments on new bonds, contributing to the cedi’s steadiness throughout the week.

Despite encountering challenges like modest offshore investor engagement and limited foreign exchange liquidity, the cedi demonstrated resilience on the spot market and exhibited mixed performance within the interbank market.

The US Federal Reserve’s cautious approach to a policy rate increase, attributed to subdued prices and a robust US economy, played a role in assuaging market uncertainties. This approach, which hints at a gradual policy hike, has provided investors with a measure of reassurance.

Commencing the week at GHS 11.43 to the dollar, the cedi sustained stable trading, registering a 0.44% increase on the retail market. Over the course of the week, the cedi also made modest gains against the pound (0.34%) and the euro (0.20%) on the retail market.

On the interbank market, the cedi experienced a minor decline of -0.05% against the US dollar but strengthened against the pound (+0.75%) and the euro (+1.30%).

Notably, the cedi has undergone fluctuations against key currencies, reflecting a decline of approximately 11.23% against the dollar on the retail market and a 21% depreciation on the interbank market.

These variations underscore the inherent volatility within the foreign exchange market, influenced by a complex interplay of domestic and global economic factors.

Source: Norvanreports