Cedi Depreciates amid rising demand and Eurobond payments
The Ghanaian cedi has continued to lose value against the US dollar, with its year-to-date depreciation now standing at approximately 26%. This latest decline has been attributed to increased corporate demand for foreign exchange and recent Eurobond coupon payments.
In an attempt to stabilize the currency, the Bank of Ghana held a 7-day foreign exchange auction, accepting all $51.4 million bids submitted. However, the intervention proved insufficient, as the cedi weakened by 0.15% week-on-week against the US dollar, closing the week’s trading at a mid-rate of GH¢16.38/$.
The cedi also recorded losses against other major currencies, depreciating 0.24% against the British pound and 0.70% against the euro over the same period. On the retail market, the local currency is currently trading at around GH¢16.40 per US dollar.
This depreciation follows the government’s resumption of Eurobond debt service payments after successfully restructuring its debt with international bondholders. Last week, the government disbursed $520 million in total, including $120 million in consent fees and $320 million in delayed coupon payments from 2022.
The resumption of Eurobond debt service, set to fully restart in January 2025, has sparked renewed concerns about the sustainability of Ghana’s foreign exchange reserves. Analysts suggest that these concerns, coupled with the rising demand for foreign currency, may continue to weigh on the cedi in the coming weeks. As Ghana moves forward with its debt servicing obligations, market watchers expect the currency to remain under pressure unless measures are taken to strengthen foreign exchange buffers and manage demand.
