Cedi returns to depreciatory trajectory; $1 now ¢12.20
The Ghana cedi has returned to its depreciation path two days after the government announced a suspension of interest payments to some external or foreign creditors.
This is due to the huge demand for the US dollars barely one and half-week to the end of the year.
Some analysts who were of the view that the recent stability of the cedi was not fundamentally supported have blamed the sudden depreciation on the timing of the announcement of the suspension of interest payments to Eurobond holders and some banks.
Right after the announcement of the domestic exchange programme by government, the cedi strengthened in value consistently for two weeks against the US dollar, to sell at ¢9.20.
However, the local currency, according to Joy Business checks at some forex bureaus, is going for ¢12.20 to one American ‘greenback’ on the forex market. But the Bank of Ghana is quoting ¢8 to one dollar on the interbank forex market.
Same could also be said about the cedi’s performance to the other major foreign currencies. Whilst it is selling at ¢12.30 to the euro, it is trading at ¢13 to the pound.
If the trend continues, the recent gains which has led to a reduction in prices of petroleum products and other goods on the market could be reverse.
External debt repayment suspension: we must be careful not to lose recent cedi gains
Associate Professor of Finance at Andrews University, Michigan in the USA, Professor Williams Peprah, had warned of the erosion of recent gains by the cedi if the government does not tread cautiously on negotiations of new terms with creditors of its external debt.
Government had announced on December 19, 2022, the suspension of Eurobonds and other external debt payments as part of its debt restructuring programme.
This suspension, it said in a statement from the Ministry of Finance, will not include the payments of multilateral debt, new debts (whether multilateral or otherwise) contracted after December 19, 2022 or debts related to certain short term trade facilities.
Source: Ghana News
