Cedi’s Stability Underpinned by Ghana’s Diverse Export Base – Economist

Business news for Friday, September 18, 2020

Source: thefinderonline.com

2020-09-18

DataBank economist Courage Kingsley Martey is confident that the Ghana Cedi will remain stable compared to its peers on the African continent for the remainder of the year, even in the context of the developing coronavirus pandemic.

Out of some 15 key currencies on the continent assessed by Databank, the Cedi remained relatively stable and is down just a negative 2.86 percent from January 2020 to now, unlike other currencies.

The Zambian kwacha and the Nigerian naira during the same period (January-September) experienced the greatest weakness of all currencies, falling by 29% and 19% respectively, while the West African CFA franc had the largest appreciation of almost a 6% against the dollar. .

Speaking to Citi Business News, DataBank economist Courage Kingsley Martey attributed Cedi’s strong performance relative to its peers on the continent to Ghana’s diverse export base, among other factors.

“You would notice that when you compare our export diversification relative to our peers, it seems that we are a bit more diversified. Look at Nigeria and Angola, for example, and you would realize that around 90% of their foreign exchange earnings come from crude oil alone, but when it comes to Ghana, our highest concentration of around 40% is in gold, which is working well today and brings in additional income. windfall. “

“The other thing that has helped the Cedi to perform very well this year is the weekly term currency auctions that the Central Bank has been conducting,” he added.

The government’s ability to secure a US $ 3 billion Eurobond line earlier this year before the full impact of the COVID-19 pandemic weighed on markets sentiment, as well as the entry of the line of IMF credit for a billion dollars have been cited as factors that have ensured the availability of foreign exchange in the market and the eventual stability of the local currency.

Commenting on the strength of the Cedi for the remainder of the year, Courage Kingsley Martey expressed hope that it will remain stable despite the upcoming election season and Christmas season.

“Hopefully, by the end of the year, even before COCOBOD enters the $ 1.3 billion syndicated line of credit, the Cedi should be stable overall,” he added.