Marginal depreciation of cedi won’t last long-currency analyst

A woman holds 03 July 2007 in Accra a wad new currency, the new cedi, that Ghana put in circulation that day, although the old money will still be valid until the end of the year. Currently, the cedi is one of the least valued currencies in Africa: 9000 cedis equal one US dollar.   Ernest Addison, head of research at the Bank of Ghana, assured in November 2006 that the changeover was not a revaluation nor devaluation, and will not affect foreign exchange.  AFP PHOTO / ISSOUF SANOGO (Photo credit should read ISSOUF SANOGO/AFP/Getty Images)The high demand for the US dollar in the past weeks has led to the cedi experiencing a marginal depreciation despite assurances from government that the cedi’s appreciation will be sustained.

The Finance Minister during the midyear budget review expressed confidence that the coming in of the 1.5 billion cocoa syndicated loan, 2nd tranche of the IMF balance of payment cash as well as the 20 million dollar weekly injection by the BOG will shore up the cedi’s value.According to Seth Terkper ‘the renewed confidence and inflows are important for the stability of the Cedi. It is expected to remain relatively stable given further inflows and other more gradual flows expected from crude oil, gold and other exports will also boost reserves and contribute to the stabilization of the Cedi’.

However in an interview with Citi Business News, currency analyst with Gold Coast Investments Limited, Sammy Ampah said though the current cedi performance is not alarming, BOG’s resumption of the weekly 20 million dollar injection will further bolster the cedi’s value.

”After the finance minister’s presentation in parliament, we saw that the cedi lost some marginal value but that is not too alarming as the central bank is to look at resuming the 20 million dollar weekly  injection this week

He adds that the cedi has seen some 0.04 percent daily depreciation records for the past four days.

This he attributes to the high demand for the dollar due  to speculative activity on the market that the currency is expected to further lose value.

”The best thing for the central bank to do is to ensure that there is enough supply to meet  demand for the currency.” He noted.

source: citifmonline.com