The Ghana cedi is projected to sell at a higher amount in relation to other major currencies on the global interbank market, Groupe Nduom (GN) Research has predicted.
According to the analyses by GN Research, published in its economic outlook report for the fourth quarter, the cedi was estimated to be sold at “GHS4.00, GHS5.04 and GHS4.43 to the US dollar, British pound and Euro respectively by the end of year”.
This it said was based on inference from the performance of the cedi during the last quarter of 2012 and subsequent years as it added that to it “expect the cedi to depreciate marginally by some 0.65% to the US dollar, but appreciate by some 2.20% and 0.64% to the sterling and euro respectively by year-end”.
GN Research indicated in its latest report that the domestic currency stood its ground against the major trading currencies within the third-quarter of 2016 (Q3 2016), adding that the cedi recorded a marginal cumulative depreciation of 0.66% and 1.56% to the US dollar and euro, respectively.
However, the cedi posted some gains of 2.04% against the sterling in Q3 2016.
“This puts the Year-to-Date (YTD) depreciation of the cedi at 4.65% to the US dollar, 7.8% to the euro, and a YTD appreciation of 8.27% to the British Pound,” adding that arguably, “this was one of the best quarterly performance of the cedi in recent years, and it succeeded in restoring confidence in the domestic currency ahead of the upcoming elections.”
The group explained that unlike the preceding quarter, the stability in the cedi reduced the pressure on prices of goods and services and pushed consumer price inflation to 16.9% in August, 2016.
This trend was largely influenced by the steady fluctuations in global commodity prices, weakening of the British pound after the Brexit, and persistent decline in China’s inflation rate during Q3 2016.
On the domestic front, GN Research indicated that the relaxation of rules governing the repatriation of export proceeds by the Bank of Ghana, relatively stable power supply, steady Treasury bill rates and the decision to hold the monetary policy rate at 26 per cent since year-open, contributed immensely to the stability of the cedi.
According to them, “This impressive ride would have been stronger, if not for the depleting gross foreign assets within the past four months and the rise in current account deficit prior to the beginning of Q3 2016”.
GN Research expressed optimism in the revamp in world crude oil prices, inflows from the US$750 million Eurobond, US$1.8 billion cocoa syndicated loan, US$116.2 million third tranche support from the International Monetary Fund (IMF), and the ongoing US$50 million domestic bond issuance among others, to offer some respite to the cedi ahead of the December polls.
Source: Ghana/AccraFM.com
