Foreign currency hoarders have started returning to forex bureaus in Ghana to change their US dollars to the local currency, the cedi, following its recent gains.
A visit to some forex bureaus in Accra witnessed some foreign currency hoarders and individuals who had previously hoarded dollars at the time the cedi was depreciated by 26% against the dollar have started releasing their dollars for the local currency.
As of today , the cedi was being bought at 3 cedis 85 pesewas while it sold at 4 cedis 25 pesewas on the foreign bureau market.
Since last week, the cedi recorded gains against the US dollar; it closed trading on Friday last week gaining 7.8 percent in value over the dollar. This year, the cedi has depreciated in value of 26 percent against the dollar.
Some forex bureau operators in Accra attributed attributed the sharp decline of the dollar and other major trading currencies to speculation in the market.
A foreign currencies dealer at the Kwame Nkrumah Circle, Awudu Yakubu, explained that the market was being driven by speculation rather than the forces of demand and supply.
He allured that the recent announcement by the Bank of Ghana that it was going to inject $20 million onto the market daily did the magic.
Following this development, Citizens for Good Corporate Governance (CGCG), a leading economic think tank and pressure group, predicted that the cedi was on the brink of a significant rebound after a dismal performance during the first half of 2015.
According to the Convener of the group, Elorm Desewu, the cedi would recover significant ground against the US dollar and other major international trading currencies during the second half of the year due to the large quantum of foreign exchange inflows being expected over the coming months, which will reverse the current shortfall in supply of forex on the local financial markets.
He said: “Some US$4 billion in inflows are being expected over the next few months from diverse sources including this year’s international syndicated loan for cocoa purchases of US$1.8 billion; the proceeds of an imminent US$1.5 billion Eurobond issue; the first tranche of recently approved World Bank financing to the tune of US$550 million; development partner bilateral assistance of some US$500 million; and two tranches of the balance of payments support from the International Monetary Fund cumulatively amounting to over US$200 million”.
Indeed, in anticipation of these inflows and in response to the Bank of Ghana’s on-going intervention in the local forex market through increased supply of forex, the cedi has already begun appreciating.
The CGCG maintained that their quantitative economic modeling suggests that the cedi could appreciate to GHc 3.2 before the end of the third quarter of this year.
African Eye News.com
