For the past two weeks the Ghana cedi has seen a depreciation.The depreciation against major  trading currencies have been linked to the rising demand for foreign exchange and foreign companies converting cedis into foreign currency to send profits back to their home countries.

Per the last market update released by the Bank of Ghana, between June 3–5, the cedi had depreciated 10.91% year-to-date with an interbank rate around GH¢11.74/$. The Central Bank announced increased forex auctions of up to $1.2 billion for June and analysts noted the cedi trading around GH¢11.72–11.74 per US dollar.

However the latest market update, weakened in both the interbank and retail foreign exchange markets, with analysts attributing the depreciation to heightened demand for US dollars amid moderate foreign exchange supply.

The cedi traded at GHS 11.85 to the US dollar, down from GHS 11.63 recorded in the previous review period in the interbank market and also depreciated against the British pound and the euro, with exchange rates rising to GHS 15.85 per pound and GHS 13.66 per euro from GHS 15.62 and GHS 13.49, respectively.

This means that one needs more cedis to buy these foreign currencies than they needed about a week ago.

The cedi also lost value in the retail foreign exchange market, where ordinary consumers and businesses buy foreign currency with the cedi depreciating 0.81% against the dollar, 1.83% against the pound and 1.40% against the euro.

Even though the Bank of Ghana injected about $1.1 billion into the foreign exchange market in May to support the cedi, the currency still weakened. In fact, the cedi lost value faster between April and May than it did in the previous month.

According to a report by citinewsroom.com, analysts have attributed the weakness to demand for foreign currency consistently outpacing supply, compounded by growing global appetite for the US dollar as central banks liquidate non-dollar assets to meet rising import costs driven by persistently high crude oil prices.

Looking ahead, market observers expect speculation in the foreign exchange market to remain relatively contained in June, supported by an announced $1.2 billion monthly foreign exchange support programme.

“Corporate demand typically peaks during the Q2 repatriation window, driven by multinational dividend and profit outflows,” the report noted.

The dollar-cedi exchange rate is expected to weaken further beyond the current interbank level of GHS 11.85 unless foreign exchange inflows strengthen significantly.

Meanwhile, in South Africa, the rand also came under pressure during the review period, weakening by 1.15 percent to close at ZAR 16.28 per US dollar.

Analysts attributed the decline to elevated oil prices and renewed geopolitical tensions that have dampened investor risk appetite and increased concerns over import costs.

The outlook for the rand remains cautious, with elevated crude oil prices and uncertain global market conditions expected to keep the currency under pressure in the near term.

Meanwhile, As part of a revamped reserve-building drive, large-scale gold miners ‌have been instructed by the government to sell 30% of their gold output to the central bank from the earlier 20%, this is according to a Reuters report.

According to the report, the directive is yet to be accepted by miners, as key commercial terms remain unresolved. Last year, miners operating under valid mining license were offered a special temporary bonus scheme from the Ghana Gold Board (GoldBod) in efforts to support the industry as well as combating gold smuggling.

The licensed miners will enjoy an additional GH¢832 per pound of gold sold through the Ghana Gold Board. This information was contained in a statement issued by the GoldBod on Wednesday, August 27.

“This novelty is in response to legitimate complaints from licensed miners about the significant reduction in the local price of gold in the last few months due to the continuous appreciation of the Ghana cedi.

“The special bonus will ensure that licensed miners who have contributed immensely to the country’s increased gold output and foreign exchange earnings do not indirectly suffer as a result of the significant appreciation of the Ghana cedi that they have helped the country achieve,” the statement read.

According to GoldBod, the recent development has been made possible as a result of the continuous appreciation of the Ghana cedi.