According to the bank, “The US$/GH¢ ratio is likely to be characterised by a fair bit of stability in the near-term.”
Standard Bank, the parent company of Stanbic Bank Ghana has predicted that domestic currency will remain at the GH¢5.40 to $1 for the rest of 2019.
The Ghana cedis
The bank captured this in its August 2019 edition of the African Local Markets Monthly (ALMM) report.
The report noted that “It seems likely that the pair will be in the vicinity of GH¢5.40”
It attributed the Cedi’s steadiness to the bolstering of financial reserves, which gave the Bank of Ghana the boldness to intervene in the financial market to stabilise the currency.
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The Stanbic Bank’s report, however, noted that despite the relative stability in the rate of cedi-deprecation, the annualised pace of depreciation will rise at a pace of between 5 and 8 percent.
“Over the medium-term, it appears likely that US$/GH¢ will rise at a modest pace, perhaps at an annualised pace of somewhere between 5 and 8 percent,” the report said.
“There is little doubt that the issuance of Eurobonds by the government earlier this year bolstered financial reserves, which in turn emboldened the Bank of Ghana to intervene forcefully in the financial market to stabilise the US$/GH¢ ratio. The GH¢ sold off after the January rate cut, with the market appearing concerned that the cut was an indication of further monetary accommodation,” it added.
It further noted that it is unlikely the Bank of Ghana will increase financial supplies to the market. This is because the trade balance for most parts of the year has been in surplus.
Background
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The Ghana cedi at the beginning of 2019 experienced constant depreciation against other foreign currencies. It was trading around 5.80 cedis to one dollar.
Bank of Ghana, hence, took some measures to ensure the stability of the currency against other foreign currencies.
