Cedi Sees Steepest Decline Last Week, Dollar Reaches GH¢16.40

The Ghana cedi experienced a sharp depreciation of 2.94% against the US dollar last week, bringing its year-to-date decline to 3.87% as of January 2025. This setback is largely attributed to persistent demand pressures, particularly from the manufacturing and energy sectors, which have strained the currency.

The decline followed the Bank of Ghana’s recent auction of US$20 million to Bulk Oil Distribution Companies (BDCs), an action that influenced the cedi’s performance. As a result, the cedi traded at a mid-rate of GH¢16.15 to the US dollar, marking its steepest loss since the beginning of the year.

In addition to the drop against the US dollar, the cedi also lost 0.52% against the British pound and 1.52% against the euro during the same period. However, as the new week began, the cedi’s exchange rate remained relatively stable, with one dollar valued at GH¢16.40. The stability suggests that there could be a temporary halt to further depreciation, at least in the short term.

Looking ahead, analysts expect the cedi to maintain this stability for the time being. Much of this is tied to global factors, especially the inauguration of US President-elect Donald Trump, whose policy announcements could influence global market sentiments and, in turn, affect the cedi’s exchange rate. Additionally, key US economic data that is scheduled for release in the coming days will likely play a significant role in shaping market expectations.

Despite the recent depreciation, there is cautious optimism among market participants that the currency could find some footing, especially as major global events unfold. The stabilization of the cedi, along with the expected release of critical US macroeconomic data, suggests that the local currency could experience a period of relative calm. Still, much depends on how global economic developments and internal demand pressures evolve over the next few weeks.

In summary, while the cedi’s depreciation last week has raised concerns, there is hope that the currency might stabilize, with key international events playing a significant role in shaping its future trajectory. The performance of the cedi remains closely tied to both local economic factors and the broader global market environment.