Cedi depreciation against US dollar slows, but declines in value by 19% in 4 months of 2022

The cedi’s rate of depreciation against the US dollar has slowed significantly, but the rapid fall in the first quarter of 2022 has kept the local currency as one of Africa’s worst performing currencies so far this year.

According to Bloomberg, the cedi lost 19.02 percent of its value against the dollar in the first four months of this year.

It did, however, depreciate by less than 1% in the month of April 2022.

The local currency reacted positively to the Bank of Ghana’s policy actions and the Finance Minister‘s fiscal measures, slowing its rate of depreciation significantly in April 2022.

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The Central Bank’s policy actions included raising the policy rate to 17 percent in order to control inflation and stimulate interest in cedi-denominated assets. The Finance Ministry’s proposal included an additional 10% cut in salaries for government appointees.

Following the announcement of the policy actions, demand for the dollar fell drastically, while some foreign investors expressed confidence in the Ghanaian economy.

Some research firms, including Fitch Solutions, predicted that the cedi would make some modest gains in the coming months. This is due to the expected improvement in the fiscal economy in the future.

Meanwhile, in the first four months of this year, the cedi was ranked 22nd and bottom of the league of Africa’s performing currencies.

The Egyptian pound was ranked 21st, with a depreciation rate of 15.10 percent against the US dollar.

With a 5.36 percent appreciation to the dollar so far in 2022, the Guinean Franc is the best performing currency on the continent.

Currencies with worst spot returns at the end of April, 2022

Currencies with best spot returns at the end of April, 2022

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SOURCE: myjoyonline