The Ghanaian cedi’s recent status as a global top performer has hit a stumbling block as rising demand for dollars by importers weighs on the currency. Companies stocking up for the year-end holiday season have driven a sharp uptick in foreign exchange needs, ending the cedi’s remarkable run earlier this year.
Data from Bloomberg shows the cedi has weakened by 13% so far this quarter, marking the largest decline among major currencies worldwide. This drop erases part of the 50% gain the cedi enjoyed in the first half of the year, fueled largely by soaring gold prices, positioning it as the world’s best-performing currency through June.
Analysts point to the Bank of Ghana’s limited ability to meet the surge in dollar demand as a key factor behind the decline. Hamza Adam, head of market-risk management at UMB Bank Ltd., said last week that banks seeking dollars on behalf of clients received only about half of their requests, although efforts are underway to meet full demand.
By early Thursday, the cedi traded slightly weaker at 11.9507 per dollar. Despite the recent drop, the currency still posted a 23% gain year-to-date. Ghana’s import-driven economy, which relies on products ranging from food to machinery, typically experiences a surge in foreign exchange demand as businesses prepare for the Christmas season.
The Bank of Ghana, while maintaining a three-year high in gross international reserves of $11.1 billion by June, stressed that its role is to keep currency fluctuations orderly. “The cedi should be stable within a reasonable range,” the central bank said, adding that market movements should reflect fundamentals without undermining confidence in the broader economy.
Source: Citi newsroom