KEY POINTS
- Ghana Cedi tumbles 13.4 in Q3, worst globally.
- Import-driven dollar demand piles pressure on currency.
- Central bank vows to keep fluctuations “orderly.”
Ghana’s cedi has swung from hero to laggard in just a few months, surrendering its title as the world’s best-performing currency to become the worst, according to Bloomberg data.
The slide comes less than five months after the cedi surged 16 percent against the U.S. dollar, driven by strong gold prices and inflows that pushed consumer inflation to its lowest in eight months. That rally has now evaporated under pressure from import-driven dollar demand.
Cedi under pressure from importers
Companies scrambling for foreign exchange to pay for machinery, food, and seasonal imports ahead of Christmas have piled strain on the cedi. The Bank of Ghana has struggled to meet requests, supplying banks with only about half the dollars they sought last week, according to UMB Bank’s head of market risk, Hamza Adam.
Losses outpace global peers
Bloomberg data show the cedi slumped 13.4 percent in the third quarter the steepest worldwide. By comparison, Argentina’s peso lost 11.5 percent, Botswana’s pula 7.7 percent, and Chile’s peso 4.3 percent. The cedi traded at GH¢11.9507 per dollar in Accra on Sept. 3.
Central bank pledges stability
The Bank of Ghana, which reported reserves of $11.1 billion at end-June, also insists the exchange rate will remain “within a reasonable range.” In a statement, the bank said it is working to ensure fluctuations “remain orderly” and do not shake confidence in the economy. Despite the fact that Ghana cedi reverses gains, the cedi is still up 23 percent this year.
