Ghana’s cedi is expected to weaken against the U.S. dollar over the coming week as demand for foreign currency from businesses and offshore players continues to outpace supply, Reuters reports.
The cedi was trading at 11.00 to the dollar on Thursday, compared with 10.90 a week earlier, London Stock Exchange Group (LSEG) data showed.
“The cedi came under renewed pressure, with dollar demand from both local corporates and offshore players,” Ronald Mensah, a trader at Stanbic Bank Ghana, told Reuters.
“We expect dollar liquidity to stay thin, with the central bank’s spot auctions still the main source of supply,” he added.
The pressure was underscored by the latest Bank of Ghana foreign-exchange auction, where bids reached $399 million against an allocation of $125 million, pointing to strong unmet demand for dollars.
Ghana’s foreign-exchange position remains relatively strong despite the renewed pressure. Gross international reserves stood at $12.94 billion at the end of June, equivalent to about five months of import cover, according to the Bank of Ghana.
Sustained cedi weakness could increase the cost of imported machinery, fuel and raw materials, particularly for companies with significant dollar-denominated obligations.
The coming weeks will be critical for businesses and investors as they assess dollar demand, central bank auction allocations and the cedi’s performance.
