The Ghana cedi is expected to remain relatively stable against the US dollar this week as risk-off investor sentiment cools off.
Demand for the US dollar last week outstripped supply despite slowing inflation. This caused the cedi to fall to levels seen in the second quarter of 2023.
The Bank of Ghana provided $20 million in the 36th bi-weekly foreign exchange auction to the Bulk Oil Distribution Companies, but this was insufficient to slow down the rising corporate demand.
The local currency lost marginally (0.46%) to the US dollar last week. Conversely, it gained 0.17% the pound but remained stable against the Euro.
So far this year, the cedi has lost about 11.6% to the dollar in the retail market and about 22% to the American greenback on the retail market.
The Ghana Statistical Service (GSS) reported a significant drop in inflation for August23 to 40.1%. The cooling print was attributed to decreased food inflation, which dropped from 55% to 51.9%.
Additionally, Fitch Solutions has revised its forecast for the Ghana cedi for the end of the year 2023, predicting it will reach ¢11.40/$ instead of the initial forecast of ¢12.40/$.
This analysts anticipate the cedi to move gently as risk-off investor sentiment cools off.