Cedi fails to sustain recovery

The cedi failed to maintain its resilience as it struggled for stability against the major trading currencies last week.

During the week under review, improved economic data in advanced countries capped the strength of the Ghanaian currency.

The US dollar, which was pressured last week reversed its slide after data released showed the addition of 281,000 jobs. The dollar as a result appreciated by 0.30 per cent against the cedi to end the week at GH¢3.01.

The Pound rallied against the Cedi last week on the back of improved UK Consumer Confidence. The local currency thus dipped by 1.12 per cent ; average rates for the cedi against the Sterling on the interbank market stood at GH¢5.16 at the close of the week.

The cedi, which made some modest appreciations against the Euro and the Swiss Franc the previous week, however failed to hold on to the gains, shedding 0.46 per cent and 0.22 per cent in the week under review. 

The Cedi traded at average week - ending rates of GH¢4.10 and GH¢3.36 to the euro and the Swiss Franc respectively. The cedi however continued to outperform the rand as a strike by South African’s engineers weighed on the Rand. Bank traders quoted 0.70 per cent higher at GH¢0.28 for the Rand.

Stock Market Review

The stock market displayed some resilience last week with gains in eight equities helping the indices defy declines by two others to bounce back from the previous week’s slide.

Strengthened by the advancers, the benchmark Composite Index soared 40.23 points to 2,392.68. This outturn saw the market post a year to date gain of 11.54 per cent at the week’s ending session.

The Financial Index (FI) also added 60.61 points to close the week at 2,163.13. The return on the financial index stands at 21.08 per cent.

Money Market

The 91-day bill extended its northward drive at the auction held last Friday, June 27, 2014 as some dealers sought higher rates for their investments.

The 182-day bill also recovered from the previous week’s slide while the one-year and two-year notes remained unchanged.

The yield on the 91-day bill added a basis point to close at 24.09 per cent. The 182-day bill clawed back the 4 basis points it shed last week to 21.28 per cent.

The one-year and two-year notes were however unchanged from the previous week’s levels of 22.50 per cent and 23.0 per cent respectively.

A total of GH¢651.84 million bids were tendered by dealers of which GH¢651.29 million were accepted by the Central Bank. This was however 27 per cent below the GH¢673 million anticipated by the Bank of Ghana.

Trading Activity

Though the week was shortened by the republic day holiday, trading activity was impressive with a total of 3.23 million shares valued at GH¢6.32 million being reregistered. 

CAL Bank for the second consecutive week enjoyed the lion’s share of trades accounting for 43.1 per cent volume and 18.8 per cent of value.

Ecobank Transnational Incorporated (ETI) and Ghana Commercial Bank also enjoyed investors’ interest.

Outlook

With demand building-up in GCB Limited, we expect it to extend gains. Ghana Oil, Total Petroleum and Benso Oil Palm are also forecasted to climb in the coming week.

On the flip side, we expect to see buyers continuing their search for mark down deals in Enterprise Group, Guinness

Ghana and Fan Milk. Ecobank Ghana may also decline on the back of selling pressure.