KEY INSIGHTS

Ghana’s annual inflation rate unexpectedly fell to a 29-month low in August, increasing the chance of an interest-rate cut when policymakers announce their decision on Sept. 30.

The Ghana Cocoa Board increased the price that pays farmers for cocoa by 45%, to $3,063 per ton, for the 2024/25 season that started this month. This boosts cocoa’s carryover support. 

Ghana Fixed Income Market’s total volume traded reached GH₵ 4.17 billion, a 31% rebounded gain compared to the previous week.

INFLATION

August 2024 saw an improvement in Ghana’s annual consumer inflation for the fifth consecutive month, dropping from 20.9% in the previous month to a nearly 2½-year low of 20.4%. On a monthly basis, consumer prices fell by 0.7% in August, marking the first decrease in a year, after a 2.4% rise in the prior month.

Despite a recent slowdown, inflation is still much higher than the central bank’s target range of 6% to 10%. The cedi’s relative stability and a further decrease in food inflation—which fell to 19.1% from 21.5% in July—caused by deflation in categories including milk, oils and fats, fruits, and nuts, were mostly responsible for the slowdown. Meanwhile, non-food inflation increased (to 21.5% from 20.5%).

PRIMARY DEBT MARKET ISSUANCE WEEK

The GoG Treasury Bill interest rates had a general upturn in all securities compared to the previous week. This week’s total bids received amounted to GH₵ 4,689.56 million for the 91-day bill, GH₵ 594.37 million for the 182-day bill, and GH₵ 245.74 million for the 364-day bill, with all bids fully accepted.

The range of bid interest rates for the 91-day bill was between 24.7976% and 25.000%, with a weighted average interest rate of 24.9165%. For the 182-day bill, bid interest rates ranged from 26.7959% to 26.8217 %, with a weighted average interest rate of 26.8012%. The 364-day bill had a bid interest rate between 28.041% and 28.123%, with a weighted average interest rate of 28.0736%.

_{Source(s): Bank of Ghana}

Week’s Ghana Fixed Income Market Total Volume Traded

However, the market experienced a sharp drop on September 12, with volumes falling to GH₵ 655 million, still led by Treasury bills. By September 13, the market closed with GH₵ 624 million in trades, with notable contributions from Treasury bills, Sell/Buy Back trades, and New GoG Notes & Bonds.

EQUITY MARKET

The local bourse’s trading activity this week was 23.30% lower than last week, with 3,182,208 shares exchanged. The total traded value was 61.43% lower, amounting to GH₵ 7.10 million. However, the market capitalization reached GH₵ 92.4 billion, a 0.65% gain compared to last week.

Week’s Equities Top Gainers & Laggard

In terms of market indices, the GSE Composite Index (GSE-CI) closed at 4,373.03, showing a weekly gain of 0.302% and a monthly drop of 1.52%, but maintaining a strong year-to-date gain of 39.7%. Meanwhile, the GSE Financial Stocks Index (GSE-FSI) also increased to reach 2,137.31 points, posting a slight weekly increase of 0.89%, a monthly rise of 0.68%, and a year-to-date gain of 12.4%.

_{Source(s): Ghana Stock Exchange}

COMMODITY MARKET

The commodities market experienced a general dip in performance compared to the previous week. A record high of US$ 2,578.48 per ounce was reached for gold on Friday as bond rates fell and the currency weakened. Fresh economic data has boosted expectations of a more aggressive response from the Federal Reserve in the form of interest rate cuts next week, which led to this increase.

_{Source(s): Trading Economics}

Brent crude prices slightly increased from US$ 71.06 to US$ 71.61 per barrel. The IEA warned of slowing global oil demand growth, particularly driven by China’s weakening economy, and projected a potential supply surplus in 2024, even with continued OPEC+ production cuts.

Cocoa prices were downturned, decreasing from US$ 9236.14 to US$ 7,669.60 per ton. Cocoa also has carryover support from Wednesday when the Ghana government raised the price that its cocoa regulator pays farmers for cocoa by 45% to $3,063 per ton for the 2024/25 season that began this month. 

CURRENCY MARKET

The Ghanaian cedi (GHS) continued to endure adverse pressure against major international currencies. The US dollar (USD), British pound (GBP), and euro (EUR) all increased relative to the cedi throughout the period under study.

Specifically, the USD/GHS exchange rate jumped marginally from GH₵ 15.35 to GH₵ 15.64, a 5-year high since 2020. Similarly, the GBP/GHS rate went from GH₵ 20.15 to GH₵ 20.56, and the EUR/GHS rate rose from GH₵ 17.01 to GH₵ 17.34. These changes show that the cedi is losing value compared to these main currencies.

_{Source(s): Bank of Ghana}