While the cedi’s year-to-date performance against the US dollar has been encouraging, it has been faltering against other major currencies such as the pound sterling and the Euro.
With the year barely a fortnight old, the cedi’s performance on the interbank market indicates a year-to-date depreciation of about 0.1 percent against the dollar as at Friday, January 12.
Against the Euro and the pound, it has shown very early signs of weakness, depreciating by 0.9 percent and 0.92 percent respectively.
The pound, last week, hit the GH¢6 mark as the euro followed in a not too distant second at GH¢5.3672.
The performance is not too different from how the local currency performed last year against these two currencies. As at January 12, 2017, the cedi had depreciated by 0.59 percent against the sterling and about 3 percent against the euro.
According to data from Bank of Ghana’s daily Interbank forex rates, last year, the cedi depreciated by 13.6 percent against Great Britain’s pound while it lost 17percent of its value to the Euro.
Over the years, the central bank has been keen on bolstering the cedi’s defences against the greenback, but it has little to show for it so far as maintaining a strong currency against the sterling and the Euro is concerned.
The cedi’s strong performance last year, when it depreciated 4.7 percent against the dollar, starkly contrasts its performance against the Euro and the sterling which was in double digits.
With Europe being the nation’s number one trading partner, how the cedi fares against the Euro and Pounds Sterling is significant to the cost of goods from that part of the world.
Imports from the UK and the European Union are increasingly becoming more expensive as traders would have to change more cedis to buy the sterling and the Euro.
Trade figures show that the country, in 2016, imported about US$800 million worth of goods and services from the United Kingdom. According to the EU, Ghana imported in excess of €2.3 billion of products from the Eurozone.
If trade statistics for 2017 follow a similar trajectory, the most probable explanation would then be that consumers of such imports are having to pay a heavier price for their appetite – an occurrence that could have contributed to the country missing its end year inflation target.
That notwithstanding, there appears to be a silver lining in the cedi’s sluggish performance for exporters and also people remitting funds from either UK or the eurozone.
An exporter who earns £10,000 exporting 10 tonnes of pineapple to UK, for instance, would have got GH¢51,591 in cedi equivalent in the early part of January last year and about GH¢59,708 in the latter part of 2017.
Companies and individuals remitting funds to Ghana would also smile at the fact that the depreciation translates into getting more money in the local currency.