The Ghanaian economy has recorded a cedi depreciation of about 8.8 per cent to the US dollar at the end of 2018.
This follows a report an agency named the Ecobank Research revealed.
The depreciation according to the report is against 4.45 per cent depreciation in 2017. In 2016, the cedi lost about 9.2 per cent in value to the American greenback.
The report further said that Angola’s kwanza was Africa’s worst performing currency in 2018 with a depreciation of -45.8 per cent against the US dollar. Kenya shilling was, however, the best performing currency in Africa with an appreciation of 0.9 per cent against the US dollar.
Ecobank Research explained that Ghana’s local currency did not experience much pressure during the Christmas festivity because of the prudent management of the monetary economy by the Bank of Ghana (BoG) during the period.
However, “Ghana’s vulnerability to US dollar rally and increased fiscal slippage risk will continue to weigh on bonds in the short term with yields currently up across maturities since the beginning of this year,” the research said.
The Ghana cedi floating regime amid high current account deficit and low FX reserves make the currency vulnerable to external shocks as the US dollar strengthens.
The report noted that “the level of intervention is unsustainable as the country is still vulnerable to external shocks due to persisting external and fiscal imbalances. The 2019 budget presentation failed to allay fears as we still expect authorities to miss deficit target.”
The BoG, therefore, is expected to maintain policy rate at currency level to ease pressures on the Ghana cedi.