Cedi Slips as Import Demand Erodes Recent Gains
The Ghanaian cedi has lost ground in the third quarter, reversing part of its stellar run earlier this year as demand for dollars surged ahead of the festive season.
Bloomberg data shows the cedi has weakened by 13 percent so far this quarter, making it the worst-performing currency globally during the period. The drop has eroded some of the 50 percent gain it recorded in the three months to June, when higher gold prices boosted investor confidence and pushed the cedi to the top of global currency rankings.
Market watchers attribute the current slide to strong demand for foreign exchange from companies importing goods ahead of the Christmas season. Ghana’s import-heavy economy relies on everything from food to industrial machinery brought in from abroad, with year-end typically seeing a spike in demand.
Analysts say the central bank’s limited supply of dollars has worsened the situation. According to Hamza Adam, head of market-risk management at UMB Bank, banks that requested foreign currency on behalf of clients recently received only about half of their allocations from the Bank of Ghana.
The cedi traded slightly weaker at 11.95 per dollar in Accra as of Wednesday morning. Despite the quarterly slump, the currency remains up 23 percent since the beginning of the year.
Ghana’s gross international reserves rose to $11.1 billion by the end of June, a three-year high, but the Bank of Ghana has signaled it will not fully meet market demand for dollars.
In a statement, the central bank said its focus was to maintain orderly market conditions and ensure exchange rate movements reflect economic fundamentals without undermining investor confidence.
