Cedi has finally recorded sustained appreciation against major international currencies including the U.S dollar, which is currently trading at around GH4.36 on the interbank market.
This is the first time the local currency has sustained its appreciation against the U.S. dollar especially, since the first week of January.
Analysts are attributing the cedi’s performance to the sudden drop in demand by businesses for U.S dollar to support imports, active return by offshore investors in the country’s local bonds and positive respond to measures outlined in the 2017 budget.
Other market watchers have argued that with the expectation that the cedi would be appreciating against the major international currencies, it might be good to wait and see how things would look like before they react.
President of Association of Financial Market operators, an association of bank treasurers and currency dealers, Ama Ghartey, tells JOYBUSINESS that if the recent policy measures are sustained on the fiscal and monetary side, then the cedi’s appreciation could last for a while longer.
Analysts say if the trend continuous, it could lead to further reduction in the price of petroleum products, utility tariffs, transport fares and the cost of doing business in the country.
The cedi since the beginning of this year has appreciated against the U.S dollar by a little over three percent.
Consolidating cedi’ stability to dominate discussions at MPC meeting
Meanwhile, the Monetary Policy (MPC) of the Bank of Ghana (BoG) would on Friday be looking at what additional measures that can be implemented to sustained record appreciation.
Today’s meeting follows a Pre-MPC meeting which saw some technical directors at the Central Bank put together an economic and financial data to support committee members, in taking a decision on the health of the economy and agreeing on the amount of money that should be in circulation.
The meeting would look at reviewing some measures that were recently instituted to stabilise the cedi and other policy tools that can be used to consolidate the said gains.
For instance, there are calls for more long-term bonds to be issued to mop up what has been described as excess cedis in circulation. This development is believed to have fuelled the cedi’s sharp depreciation over the past months resulting in more than 5 percent drop in its value.
However recent gains put the cedi’s value Friday at around GH4.36 as compared to the GH4.80 quoted by some banks earlier this month.
The meeting would also look at how the economy has really performed since January.
For some, this might be a true verdict on how the Akufo-Addo government has fared in stabilising the economy and whether the public debt, which reached GH122 billion in December is going up or down.
Finally, the committee would recommend an increase in the policy rate or maintain it at 25.5 percent, which often influences cost of credit in the country.
So for those who are servicing a loan or intend to take one very soon they may have to look out for the rate that the Central Bank might settle on and announce at a press briefing on Monday.
Analysts say the rate could be maintained or reduced marginally.