The cedi’s losing streak against major trading currencies continues on the foreign exchange market.
Even though there is an indication of a marginal improvement in the cedi’s performance, the currency is still struggling to stabilize against major ones.
According to the Bank of Ghana, between May and December 2017, the cedi depreciated by 3.4 percent to the dollar on the average.
When compared to the British Pound and the Euro, the cedi depreciated by 9 and 11 percent on the average, respectively.
However the report further shows that the highest depreciation for all the three major international currencies were recorded in November and December 2017.
This development some currency analysts have attributed to the relative rise in imports to meet demand during the festive season.
Meanwhile, the Economist Intelligence Unit early this year predicted that the cedi could be trading to 6 cedis to a dollar by 2022.
The EIU cited political uncertainties associated with Ghana’s 2020 general elections as basis for the prediction.
But currency analysts have expressed mixed reactions to this claim.
For Economic Analyst with GN Research, Emmanuel Zewu, this prediction is possible.
His basis are that the relative stability of the cedi have least been backed by strong sustainable policies.
“We need to ask ourselves what has accounted for this improvement, is it because the economic fundamentals are improving or we are managing the situation temporarily. We should look at the bonds that have been issued as well as the Bank of Ghana’s decision to release some dollars into the system especially in the early stages of the year. All these things should have accounted for the marginal improvement that we have seen last year,” he argued.
But the General Manager for Treasury at HFC Bank, Joseph Nketsia disagrees with the projection by the EIU.
Though he admits to the cedi’s seasonal depreciation, he believes the move may least hit the 6 cedis mark.
“We know with the oil exploration, our foreign exchange resources are likely to increase considerably. It is true that on a year on year basis the cedi depreciates but I don’t think that the cedi will depreciate to 6 cedis to a dollar by 2020.”
A year on year comparison with the cedi’s performance on Wednesday – January 24, 2018 shows that the cedi depreciated by 4 percent to the dollar.
Similarly, it has depreciated by 17 percent and 19 percent to the British Pound and Euro respectively.