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HomeWorldGhana cedi weakens 18% in Q1 despite rising oil prices

Ghana cedi weakens 18% in Q1 despite rising oil prices

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The Ghanian cedi recorded an 18.21 per cent depreciation against the US dollar in the first quarter of 2022, a report by Bloomberg showed.

This Ghana currency is now ranked as the worst among African currencies with the “Worst Spot Returns”. However, for the timely intervention by the Bank of Ghana, the situation could have been worse.

Despite the country benefiting from the high price of crude oil on the international market and to some extent the favourable price of gold, the cedi has not fared well so far this year.

The Cedi came under severe pressure, particularly in the months of February 2022 and early March 2022. This was largely due to the huge demand for the US dollar, as investors seek dollar-denominated assets, due to unfavourable ratings of Ghana’s economic outlook by rating agencies, Fitch and Moody’s.

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The government had also faced stiff opposition in getting some revenue bills, particularly the Electronic Transaction Levy, from getting passed. Similarly, investors wanted some reassurance from the government that it was committed to narrowing the fiscal deficit, whilst reducing arrears and the rising debt.

However, the E-Levy has since been passed, whilst the government had introduced fiscal measures to revive the fiscal economy. Coupled with the timely measures by the Bank of Ghana, this has since slow down the rate of depreciation of the cedi against the US dollar.

Meanwhile, the Angolan Kwanza is the best performing currency in Africa this year with an appreciation of 24 per cent to the dollar in the first quarter of 2022.

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