Ghana’s cedi suffered a slight loss against the pound after Britain voted to exit the EU on Thursday.
The value of the cedi recorded a marginal plunge of 1.04 percent on the interbank foreign exchange market.
Cedi’s performance
Ghana’s cedi which had been trading at 5 cedis 72 pesewas to a pound (buying) and 5 cedis 73 pesewas (selling) since
Monday changed gear on Thursday and begun trading at 5cedis 78 pesewas (buying) and 5 79pesewas (selling) on the interbank foreign exchange market where banks trade among themselves.
It is unclear whether the marginal decline of the cedi against the pound was due to the exit as earlier a number of currency analysts had told Citi Business News the cedi was not likely to feel any impact against the British pound with any decision by the UK to stay or exit the EU.
Currency analyst, Samuel Ampah argued that the volume of trade between the UK and Ghana as well as the limited financial aid granted to the latter will not result in a fast depreciation of the cedi.
“I can clearly state that there will not be any impact. Ghana is not currently benefiting directly from Britain in terms of aid. When Ghana was regarded as a poor or developing country, you could have Britain giving out some aid. Now Ghana is not directly benefiting so much in terms of aid from Britain that is how come you can guard the British pound being used to support our economy. But because we are not earning so much from Britain, we might not necessarily feel it.”
Global impact
Elsewhere – across the globe however, the British pound plummeted by 10 percent reaching levels not seen since 1985 well below the value at the worst of the 2008 financial crisis the euro dropped nearly 4 percent while shares in London were instantly down by nearly 16 percent. The BBC reported that the London stock market had plunged more than 8% in the wake of the UK’s vote to leave the EU.
In the opening minutes of trade, the FTSE 100 index fell more than 500 points before regaining some ground.
Banks were especially hard hit, with Barclays and RBS falling about 30%.
Earlier, the value of the pound fell dramatically as the referendum outcome emerged. At one stage, it hit $1.3236, a fall of more than 10% and a low not seen since 1985.
The Bank of England said it was “monitoring developments closely” and would take “all necessary steps” to support monetary stability.
Impact on GSE
As expected there was no impact of the news on the Ghana Stock Exchange (GSE) which usually reacts slowly to external developments.
British bank Stanchart’s (SCB) share on the GSE recorded no price change and remained at 14 cedis 20 pesewas .
UK Prime Minister to step down by October
Meanwhile UK Prime Minister David Cameron is to step down by October.
Speaking outside 10 Downing Street, he said he would attempt to “steady the ship” over the coming weeks and months but that “fresh leadership” was needed.
The PM had urged the country to vote Remain but was defeated by 52% to 48% despite London, Scotland and Northern Ireland backing staying in.
He is reported to have informed the Queen of his decision to remain in place for the short term and to then hand over to a new prime minister by the time of the Conservative conference in October.
Source: citibusinessnews
