Cedi's slide against the dollar deepens as import demand builds towards Christmas

Pinned summary · as of 04:21

The cedi is still losing ground to the US dollar as September closes, and reports put its fall since January anywhere from roughly 8% to a little above 10%. The Bank of Ghana treats the recent swings as part of ordinary trading, while analysts point to fuel imports, a firmer dollar and pre-festive stock-building as the pressures behind them.

What we know

• The cedi has weakened against the US dollar since the start of the year, according to The Press Radio, The Vaultz News, MyJoyOnline and Opemsuo 104.7, although their percentages differ.
• The currency fell 1.86% against the dollar in July, wiping out part of a 3.30% rise in June, The Press Radio and The Vaultz News both reported. They also recorded August losses of 0.52% over one week and 1.66% across the month up to that point.
• The Bank of Ghana committed about US$2.01 billion to the market during June, a step credited with helping the cedi gain that month.
• The Bank of Ghana says the recent movements reflect normal market conditions and should not be read as a shift in its longer-term view of the cedi.
• Heavier spending on imported fuel and businesses stocking up ahead of Christmas are lifting demand for dollars. The Press Radio reported both pressures, The Vaultz News quoted market expert Gifty Annor-Sika Asantewah on oil-driven import bills, and MyJoyOnline cited Databank Research on energy-sector demand and seasonal buying.
• A firmer US dollar worldwide is weighing on the cedi. The Bank of Ghana acknowledged tighter global financial conditions and a stronger dollar, and MyJoyOnline linked the latest pressure to the Fed's September rate hike.
• The Bank of Ghana has aimed to supply about US$500 million of dollars to the market in September, according to The Press Radio and MyJoyOnline.

What's disputed / unconfirmed

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  Estimates of the cedi's fall against the dollar this year vary: The Press Radio and The Vaultz News cited 8.06%, Opemsuo 104.7 gave 9.5% over the first nine months, and MyJoyOnline reported 10.04% after the past fortnight.
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  Current exchange rates differ by source and market. Opemsuo 104.7, citing the Bank of Ghana, put the rate at about GH₵11.55 to the dollar in September, while MyJoyOnline reported GH₵11.62 on the interbank market, GH₵11.93 in the retail market and about GH₵11.90 at forex bureaus at the start of the week.
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  Forecasts diverge and each rests on one report. The Vaultz News quoted Ms Asantewah as saying the cedi could end 2026 near GH₵13 to the dollar if dollar supply is adequate and oil prices stay contained, and quoted the Bank of Ghana as expecting relative stability to December. MyJoyOnline reported Databank Research expecting a mild bias towards further weakness as festive demand builds.
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  MyJoyOnline reported that the central bank had supplied about US$445 million so far in September, short of its target, yet interbank supply stayed tight. The Press Radio separately said the Ghana Gold Board was expected to contribute a further US$1.4 billion of dollar receipts this month, which it said could lift total support to as much as US$1.9 billion. Neither figure has been confirmed by another report.
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  Explanations for the pressure vary by source. Databank Research cited steady dollar demand from the energy and manufacturing sectors, and the World Bank, as reported by Opemsuo 104.7, pointed to energy-sector demand and corporate dividend payments. Ms Asantewah stressed higher oil prices and the Middle East conflict, and The Vaultz News reported Brent crude at about $99.38 a barrel.
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  Opemsuo 104.7 reported that the cedi had shed 9.0% versus the pound and 7.3% versus the euro since January, that it had firmed to about GH₵10.95 earlier in August before slipping again, and that the Bank of Ghana introduced a Foreign Exchange Operations Framework in September to set out how it intervenes. No other report carried these points.

Why it matters for Ghana

A weaker cedi raises the cost of imported fuel, machinery, food and raw materials, and that usually shows up sooner or later in shop prices and transport fares. Importers in Accra, Tema and Kumasi who need dollars for Christmas stock face the extra squeeze the analysts describe. Ms Asantewah urged firms owing large sums in dollars to hedge their currency risk sooner instead of leaving it late.