Cedi dips further as external shocks intensify; one dollar equals GH¢11.70 at forex bureaus

The Ghana cedi dipped further this week at the forex bureaus. One dollar equals GH¢11.70. The cedi extended its mild correction over the two-week review period, shedding some gains across major pairs.

In the interbank market, the cedi depreciated against the dollar and euro to GH¢11.00/US dollar (-0.27%) and GH¢12.70/EUR (-0.47%) but edged up 0.13% against the pound to GH¢14.56. In the retail segment, the cedi softened against the dollar to GH¢11.68/USD (-0.21%), while appreciating against the pound and the euro by 1.31% and 0.75%, respectively, to GH¢15.30 against the pound and GH¢13.30 against the euro. Overall, the currency posted mixed but broadly stable performance. According to Databank Research, "We believe the current cedi slippage is largely driven by mounting demand pressures, particularly from Bulk Oil Distribution Companies (BDCs) requiring more foreign currency amid elevated crude oil prices. Stable retail rates reflect tight spreads supported by central bank interventions". Its year-to-date appreciation, however, stands at 4.51%.

Looking ahead, forecasting points to expectations tilted against the cedi as West Asia conflicts present a double-edged sword - boosting gold/oil export windfalls on one hand, while threatening energy security and amplifying safe haven forex demand on the other. Despite these favourable inflows, the heightened demand and bearish sentiment to counter cautious forex interventions is weighing on the cedi.