The Ghana cedi was negatively affected by last week's general elections, Frontline Capital Advisors has stated.
According to the investment firm, the cedi depreciated by 2.25 percent in value against the US dollar during election week December 5-9, 2016 to trade at 4.21 against the US dollar.
Since January 1, 2016, the local currency had depreciated by about 9.95 percent to the American currency. But the election fever and the Christmas festivity triggered the over 2.0 percent decrease in value of the local currency last week as investors seek safe haven for their investments in dollars.
Beside the Egyptian Pound (-56.89 percent) and the Nigerian Naira (36.77 percent), the local currency is one of the worst performing currency in Africa this year. But some analysts are projecting about 5.0 percent depreciation of the cedi to the dollar this year.
Ecobank Research says the weakening of the cedi was due to increasing corporate and offshore demand for US dollars as well as strong corporate dollars demand to meet import bills, US dollar debt servicing costs, and large fiscal and current account deficits.
It, however, noted that the International Monetary Fund's (IMF) advised reforms and continued tight policy stance will help build confidence, the Finder Newspaper reported.
As at November 2016, the Ghana cedi was not among the top 10 performing currencies in sub Saharan Africa.
Currencies such as Kenya shilling (0.2 percent) appreciation against the US dollar since January 1, 2016; Mauritius rupees (0.53 percent) appreciation against the American currency; Zambian Kwacha (7.0 percent) appreciation against the US dollar; the Cape Verde escudo (3.4 percent) appreciation against the ‘green back’ and Ivorian CFA (4.9 percent) against the American currency were all doing better than the cedi in 2016, at the time.
Presently, the cedi is trading at about 4.04 percent on the interbank market. Whilst most forex bureau are selling the cedi at GH¢4.32 for one US dollar, the Bank of Ghana website quotes GH¢3.96 for one US dollar.