The Ghanaian cedi continued its strong performance last week, appreciating against the US dollar and other major foreign currencies in the retail market.
This positive trend reduced its year-to-date depreciation to 1.43% against the US dollar, a notable improvement compared to the 1.85% loss recorded during the same period last year.
The cedi’s stability was largely driven by subdued market activity and increased foreign exchange interventions by the Bank of Ghana (BoG). By the end of the month, the local currency was trading at an average rate of GH¢15.81 per US dollar.
Week-on-week, the cedi gained 1.11% against the US dollar, 0.78% against the British pound, and 0.6% against the euro. It started the week at GH¢15.85 to the dollar before strengthening further.
The BoG played a crucial role in stabilizing the currency by injecting US$320 million into the foreign exchange market last week, helping to meet corporate demand and curb speculative pressures.
Despite the gains, analysts anticipate that early buffer build-ups, particularly from the energy and manufacturing sectors, could exert pressure on the local currency in the coming weeks. However, they believe sustained intervention by the central bank could mitigate these effects.
“Sustained support could lead to frequent nominal appreciations, but any slowdown in intervention may heighten demand expectations, potentially putting pressure on the cedi,” Databank Research noted.
According to the Bank of Ghana’s January 2025 Summary of Economic and Financial Advisory report, the cedi depreciated by 2.4% against the US dollar in January, trading at GH¢15.06 on the interbank market.
SOURCE: Joy Business
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