Cedi depreciates against all three major trading currencies in Q2

Figures provided by the Bank of Ghana (BoG) through its Quarterly Economic Bulletin for the second quarter (Q2) of 2021 has shown that the local currency (the Ghana cedi) depreciated against the three major currencies on quarter-on-quarter basis in Q2 of 2021.

On the Interbank market, the cedi depreciated by 0.6%, 1.1% and 1.8% against the US dollar, the Pound sterling and the Euro, respectively during the second quarter of the year.

The Central Bank however stated that, “the cedi, performed better against the major international currencies compared to the same period in 2020 when it depreciated by 4.0%, 3.5% and 6.1% against the US dollar, the pound sterling and the euro, respectively.”

On the Forex Bureau market, the cedi depreciated by 1.7% against the US dollar, 2.7% against the pound sterling and recorded depreciation 2.3% against the euro.

“The Ghana cedi however, performed better compared to the corresponding period of 2020 when it depreciated by 1.6%, 6.3% and 5.0% against the US dollar, the pound sterling and the euro, respectively,” the Bank said.

It was explained that the domestic currency weakened mainly due to demand pressures from the manufacturing and energy-related sectors, as re-alignment of rates by dealers in the forex market also affected the performance of the cedi.

Furthermore, international developments with respect to the euro and the pound sterling impacted on the local currency, thereby contributing to the depreciation of the Ghana cedi in the quarter under review.

Foreign Exchange Transactions

Regarding foreign exchange transactions, it was observed that at the end of second quarter of 2021, the total volume of forex purchases recorded was US$4,818.12 million. Commercial bank purchases contributed 86.5% of the total purchases (US$4,167.80 million).

The Central Bank’s support to the market accounted for 12.4% (US$597.20 million) and purchases from forex bureaus contributed the remaining 1.1%.

Compared to quarter one of 2021, the volume of purchases increased by 0.2%. Similarly, compared to Q2 of 2020, the volume of total purchases increased by 2.5%.

Commercial bank purchases increased by 14.2%, while Bank of Ghana’s support decreased by 42.1%. Meanwhile, forex bureau purchases grew by 148.6%.

With regard to sales, total volume of sales recorded was US$4,869.98 million. Commercial bank sales amounted to US$4,818.32 million (98.9% of the total amount).

Forex bureaus contributed the remaining amount. The total volume of sales decreased by 11.0% on a quarterly basis. However, compared to Q2 of 2020, total sales increased by 4.1%.

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