The exchange rate for the dollar on December 10, 2022, is GH12.60.
This has been attributed to the government’s introduction of a scheme for restructuring debt.
The current strengthening of the cedi can also be linked to recent deterioration in the value of the dollar.
While the Euro is being purchased at GH12.80 and selling at GH13.70, the British pound is being purchased at GH15.00 and selling at GH16.30.
The Finance Minister said that Ghana’s debt has exceeded 100% of GDP. He stated that the government is inviting domestic bondholders to voluntarily swap their existing bonds for new ones with new maturity dates.
The Ghana cedi has been somewhat more stable against the dollar.
The dollar sold for less than GH14 and a GH13 purchase price at the Afriswap forex bureau.
As of December 10, 2022, the dollar is selling at GH¢12.60. This has been attributed to the announcement of a debt restructuring programme by the government.
The dollar has also experienced some weakening in recent times and that can also be attributed to the cedi’s strength lately.
The British Pound is being bought at GH¢15.00 and selling at GH¢16.30 while the Euro is being bought at GH¢12.80 and GH¢13.70.
The governmentannounced that Ghana’s debts have reached unsustainable levels therefore the need to restructure.
The Finance Minister said that Ghana’s debt has exceeded 100% of GDP. He stated that the government is inviting domestic bondholders to voluntarily swap their existing bonds for new ones with new maturity dates.
This announcement has led to a further downgrade of Ghana’s credit ratings as it implies that Ghana is at a high risk of default.
“I’m proud that I, Nana Yaa Henrietta Okora coming from nowhere in Ghana, have a job that I employ even the American people to work for me,” CEO of A& H African and Jamaican Restaurant, New Jersey, United States stated.
Madam Nana Yaa recalls when she relocated to the United States in 2000. She recounted that when her Grandfather and mother picked her up from the airport, she thought she would not walk on sand but sky in America.
“My grandpa told my mom, ‘ask your daughter and son if they picked any money from the floor. When you people were in Ghana, you thought they were dollars on the floor for picking.”
She narrated that settling into her new home was not easy. Before choosing to open a restaurant, Nana Yaa worked at a tripe store, a military clothing supply factory and a nursing home. She tells how these experiences shaped her perceptions, especially about diseases like Dementia and Alzheimers, that is said to be witchcraft in Africa.
Nana Yaa explained, “Those times I was working there, the minimum wage was like 11 dollars per hour, and I work a minimum of 40 hours a week. It was not that easy. A lot of stuff happened, so I decided I don’t want to work for anybody. I noticed that we didn’t have any African Restaurant in my area. So I decided to open an African Restaurant and see how it goes.”
A&H African and Jamaican Restaurant sells food indigenous to Africa and the Caribbean, including their best sellers, banku, fufu, omotuo (riceballs), oxtail and jerk chicken.
“America has more opportunities than Ghana. Over here, when you work, you are going to make it,” Nana Yaa continued. “I don’t think you can be here in America to be lazy. If you are lazy in America, you will go home with nothing.”
Share prices have risen as investors greet official data showing that the cost of living in the United States increased at a slower-than-expected rate last month.
Shares soared in the United States and Asia as traders reacted to the data, and stock markets in the United Kingdom and Europe rose on Friday morning.
According to the Labor Department, the US consumer price index increased 7.7% year on year in October.
Since the beginning of the year, this is the smallest annual increase.
The figure, which is down from 8.2% the previous month, means the US central bank may ease its aggressive approach to raising interest rates to tackle inflation.
On Friday Hong Kong’s Hang Seng index jumped by 7.7%, while the Nikkei in Japan ended the day 3% higher and South Korea’s Kospi gained 3.4%.
The Hang Seng was also boosted after Chinese state media reported that Covid-19 travel measures will be eased.
That came after the benchmark S&P 500 index in New York rose by more than 5.5%, while the Dow Jones Industrial Average gained 3.7%. At the same time the technology-heavy Nasdaq soared by 7.35%.
Shares in US technology companies saw some of the strongest gains with Amazon up by over 12%, while Apple and Microsoft rose more than 8%.
European share prices edged higher on Friday too, although they didn’t match the large gains seen in the US and Asia.
In London, the FTSE 100 index was up by 0.4% in early trading after official figures showed the UK appears to be heading into recession.
The economy contracted by 0.2% between July and September, according to the Office for National Statistics.
Meanwhile the US dollar, which has jumped in value this year, weakened against major currencies including the pound and the yen.
Earlier this month the US Federal Reserve raised its key interest rate to a fresh 14-year high.
The move took the central bank’s benchmark lending rate to 3.75%-4%, the highest since January 2008.
Also this month, the Bank of England lifted interest rates to 3% from 2.25%, the biggest jump since 1989, and warned that the UK is facing its longest recession since records began.
A recession is defined as when a country’s economy shrinks for two three-month periods – or quarters – in a row.
Higher interest rates make it less likely that people will spend on big ticket items, such as homes, cars or expanding their businesses. That fall in demand is, in turn, expected to curb price increases.
Food and energy prices have jumped, in part because of the Ukraine war, which has left many households around the world facing hardship and started to drag on the global economy.
The Chinese yuan fell to its lowest level in nearly 15 years on Tuesday as investors fled Chinese assets amid concerns about Xi Jinping’s dramatic move to consolidate power in a major reshuffle of Communist Party leaders.
On the tightly controlled domestic market, the yuan dropped sharply, hitting the weakest level since late 2007. It was lastdown 0.6% at around 7.3 per dollar. The currency has lost 15% against the US dollar this year.
In trading outside of mainland China, the yuan briefly plunged to around 7.36 per dollar early Tuesday, the lowest level on record, according to Refinitiv, which has data going back to 2010. It later pared losses, trading at 7.33 by 3:35 p.m. Hong Kong time (3.35 a.m. ET).
The currency was pegged at 8.28 to the US dollar for years until 2005 when China moved to a “managed floating exchange rate.” It then appreciated steadily, climbing to a peak of nearly 6.01 in 2014.
The declines came alongside a historic market rout for Chinese assets worldwide. On Monday, Chinese stocks plummeted in Hong Kong and New York, wiping out billions of dollars in market value. Hong Kong’s benchmark Hang Seng (HSI) Index closed down 6.4%.
The Nasdaq Golden Dragon China Index, which tracks many popular Chinese companies listed on Wall Street, dived more than 14%. On Tuesday, the Hang Seng (HSI) slipped further and was down 0.2% in afternoon trading.
The huge sell-offs came just days after the ruling Communist Party unveiled its new leadership for the next five years. In addition to securing an unprecedented third term as party chief, Xi packed key positions with staunch loyalists.
A number of senior officials who have backed market reforms and opening up the economy were missing from the new top team, stirring concerns about the future direction of the country and its relations with the United States.
International investors spooked by the outcome of the leadership reshuffle dumped Chinese assets despite the release of stronger-than-expectedChinese GDP data on Monday. They’re worried that Xi’s tightening grip on power will lead to the continuation of Beijing’s existing policies and further dent the economy, which despite the rebound last quarter is still growing way below the official 5.5% target for this year.
It appears the depreciation pressures are unending, as demand for the US dollars far outstrips supply. On the Forex Forward Auction Market, the Bank of Ghana has since the beginning of the year been supply $25 million every fortnight, though demand exceeds over $100 million.
Checks by Joy Business at some leading forex bureaus across the capital city Accra indicate that the cedi is hovering around ¢15.20.
However, the rate of deprecation against the pound and the euro have slowdown considerably. A pound and euro are going for ¢16 and ¢14 respectively.
Global leader in financial services and US firm, JP Morgan, had said in its recent report on Ghana that the Bank of Ghana’s decision to purchase dollars from mining and oil companies, inadvertently reducing forex availability within the inter-bank market is one of the reasons behind the falling value of the cedi.
It also pointed out that the loss of confidence domestically has resulted in a significant drain from the financial account, even though portfolio outflows have been relatively limited.
The cedi depreciated by more than 20% in nominal term the whole of last week.
In terms of the year-to-date depreciation, it is hovering around over 50% to the American ‘greenback’.
The Ghana cedi has yet again seen a further decline in its value against the United States Dollar in less than two days.
The local currency is reportedly now sold at ¢14.30 to the US dollar at some forex bureaus or in the retail market.
While the market has not yet fully processed this devastating decline in value, there were unverified reports of the cedi being sold at a pitiful 15 to the US as of October 20 evening.
The demand for the dollar keeps surging, as there is very little of the currency in circulation.
The cedi depreciation has rapidly deteriorated since the beginning of the year.
At the beginning of October 2022, the local currency was trading at ¢11.2 against the dollar.
During the same period under review, the persisting demand on the foreign currency pushed the cedi to ¢12.45.
As of Friday, October 14, 2022, the Ghana cedi lost 9.03% in value to the US dollar.
Ghana’s currency further depreciated by 3.3% on Monday, October 17.
As a result, the Ghana cedi has been ranked as the worst-performing currency in the world by Bloomberg.
The local currency is also depreciating faster than the pound and euro. A pound and euro are also trading at ¢14.05 and ¢12.10 respectively.
To combat the decrease in the value of the local currency, the central bank is going after entities transacting in dollars or any other foreign currency without permission.
Also, a $1.13 billion cocoa syndicated loan has been secured by the government to help improve the supply of the dollar.
Steve H. Hanke a professor of Applied Economics at the Johns Hopkins University, has reiterated his point that the managers of the Ghanaian economy need to establish a currency board in order to save the fallen cedi against the dollar.
The Professor, who is based in the US, for some time now has been monitoring and commenting on the Ghanaian economy and how the legal tender is depreciating against the US dollar.
He noted in his October 20 tweet that the cedi has depreciated by 43.98% against the US dollar since January 2022 to be placed 4th on his weekly Hanke’s currency watchlist.
He said, for the cedi to gain its strength and appreciate against the US dollar, the President together with the managers of the Ghanaian economy must install a currency board.
“The Ghanaian cedi has depreciated against the USD by 43.98% since Jan 2022, which is why #Ghana takes the 4th place in this week Hanke’s #CurrencyWatchlist. To save the cedi, GHA must install a #CurrencyBoard, NOW,” Prof. Steve Hanke’s tweeted.
The Cedi has recently been classified by Bloomberg as the worst-performing currency against the US Dollar.
Currently, the Cedi is trading at around GH¢13 – GH¢14 to a dollar at some forex bureaus. The depreciation rate is a contributory factor for the ongoing shop closures ordered by the Ghana Union of Traders Association (GUTA).
According to the group, the fast depreciation of the Cedi is eroding their profits and also increasing the cost of doing business.
On the Interbank forex rates from the Bank of Ghanaon, October 18, 2022, the Ghana Cedi is trading against the dollar at a buying price of 10.8655 and a selling price of 10.8763.
As compared to Monday’s trading of a buying price of 10.7115 and a selling price of 10.7223. At a forex bureau in Accra, the dollar is being bought at a rate of 12.38 and sold at a rate of 12.65.
Against the Pound Sterling, the Cedi is trading at a buying price of 12.3769 and a selling price of 12.3903 as compared to Monday’s trading at a buying price of 11.9916 and a selling price of 12.0057.
At a forex bureau in Accra, the pound sterling is being bought at a rate of 13.30 and sold at a rate of 13.70.
The Euro is trading at a buying price of 10.6909 and a selling price of 10.7007 as compared to Monday’s trading at a buying price of 10.4265 and a selling price of 10.4370.
At a forex bureau in Accra, Euro is being bought at a rate of 11.55 and sold at a rate of 11.85.
The South African Rand is trading at a buying price of 0.6035 and a selling price of 0.6040 compared to Monday’s trading at a buying price of 0.5851 and a selling price of 0.5857.
At a forex bureau in Accra, South African Rand is being bought at a rate of 0.45 and sold at a rate of 0.80.
The Nigerian Naira is trading at a buying price of 40.5017 and a selling price of 40.5670 as compared to Monday’s trading at a buying price of 41.1033 and a selling price of 41.1248.
At a forex bureau in Accra, Nigerian Naira is being bought at a rate of 14.00 Naira for every 1 Cedi and sold at a rate of 16.50.
Food importers from Africa to Asia are scrambling for dollars to pay their bills as a surge in the US currency drives prices even higher for countries already facing a historic global food crisis.
In Ghana, importers are warning about shortages in the run up to Christmas. Thousands of containers loaded with food recently piled up at ports in Pakistan, while private bakers in Egypt raised bread prices after some flour mills ran out of wheat because it was stranded at customs.
Around the world, countries that rely on food imports are grappling with a destructive combination of high interest rates, a soaring dollar and elevated commodity prices, eroding their power to pay for goods that are typically priced in the greenback. Dwindling foreign-currency reserves in many cases has reduced access to dollars, and banks are slow in releasing payments.
“They cannot afford it, they cannot pay for these commodities,” said Alex Sanfeliu, world trading head for crop giant Cargill Inc. “It’s happening in many parts of the world.”
The problem isn’t a new one for many of the countries — nor is it limited to agricultural commodities — but the reduced purchasing power and dollar shortages are compounding wider strains across global food systems following Russia’s invasion of Ukraine.
The International Monetary Fund has warned of a catastrophe at least as severe as the food emergency in 2007-08, US Treasury Secretary Janet Yellen called for more food aid for the most vulnerable, while the World Food Programme says the globe is facing its largest food crisis in modern history.
On the ground, many importers are struggling with rising costs, shrinking capital and difficulty in obtaining dollars to ensure their shipments are released from customs on time. That means cargoes get stuck at ports or may even be diverted to other destinations.
“There was always a historical strain on making these payments, but at the moment it’s unbearable pressure,” said Tedd George, a consultant specializing in Africa and commodities markets.
In Ghana, where the cedi has lost about 44% this year against the dollar — making it the second-worst-performing currency in the world — there are already worries about supplies ahead of Christmas.
“We think there is going to be a shortage of some food items,” said Samson Asaki Awingobit, executive secretary of Ghana’s importers and exporters association which includes buyers of grains, flour and rice. “The dollar is swallowing our cedi and we are in a hopeless situation.”
To be sure, some countries may be cushioned by their purchases in other currencies like euros, while energy-exporting nations will profit from overseas revenues. Global food-commodity costs have also fallen for six straight months, giving hopes for a relief to consumers.
But the soaring dollar threatens to erode some of that benefit, according to Monika Tothova, an economist at the United Nations’ Food and Agriculture Organization, which sees this year’s global food import bill at a record high.
The situation is still fragile. Concerns are mounting anew over supplies out of the Black Sea region as the war in Ukraine escalates and there are questions over the future of the deal to ship grains out of Ukrainian ports. Weather shocks have driven volatility in recent months, stocks are low and soaring fertilizer and energy prices are boosting food production costs.
As the Federal Reserve continues to tighten monetary policy, the dollar’s strength versus currencies in emerging and developing markets will add to inflation and debt pressures, the IMF said in its global outlook this week.
In flood-ravaged Pakistan, government moves to prevent foreign-exchange outflows meant that containers holding food like chickpeas and other pulses piled up at ports last month, sending prices surging, according to Muzzammil Rauf Chappal, the chairman of the Cereal Association of Pakistan.
The situation eased after the appointment of new finance minister who pledged to clear pending transactions for businesses that have been delayed because of a dollar shortage in its interbank market.
“The situation was quite dangerous,” said Chappal, whose company is the country’s biggest private sector wheat importer. “We were expecting the country to face a serious grain crisis.”
In Egypt, one of the world’s top wheat importers, shortages have plagued private sector mills that supply flour for bread that isn’t part of the country’s subsidy program.
About 80% of millers have run out of wheat and stopped operations as some 700,000 tons of grain remain stuck at the country’s ports since the start of last month, according to the Chamber of Cereal Industry. The supply ministry said Wednesday it would provide wheat and flour to private sector mills and pasta factories.
Cargill’s Sanfeliu said he expects global wheat trade flow to shrink by as much as 6% in the upcoming months, with corn and soybean meal flows dropping by as much as 3%, as developing countries struggle to pay for food and animal feed.
In Bangladesh, business conglomerate Meghna Group of Industries may have to cut the amount of wheat it had planned to import before the war broke out amid at least a 20% jump in wheat import costs due to the stronger dollar, said Taslim Shahriar, the company’s procurement official.
“Currency fluctuations are creating huge losses for the company,” said Shahriar. “We have never seen this before.”
–With assistance from Arun Devnath, Abdel Latif Wahba, Asantha Sirimanne, Tarso Veloso Ribeiro, Souhail Karam, Katarina Hoije, Ama Tanoh and Eddie Spence.
The dollar has hit the ¢11 to $1 mark as some forex bureaus in parts of Accra are selling a dollar at an average of ¢11.2 on Saturday, October 8, 2022.
Checks by Joy Business indicate that the demand for the dollar keeps surging, as there is very little dollars in circulation.
Some forex bureau operators who spoke to Joy Business on condition of anonymity said the recent action by the Bank of Ghana has yielded little return.
According to them, there are no dollars in circulation.
But, they hope the inflows from the $1.13 billion cocoa syndicated loan will help improve supply and slow down the rate of depreciation of the currency. The first tranche is expected by the end of this month.
On the interbank market, the Bank of Ghana quoted the dollar at 9.63 (selling) on Friday, October 7, 2022.
Meanwhile, the cedi is also not faring well against the Pound and Euro.
It is going for ¢12.5 to the Pound and ¢10.57 to the Euro respectively.
Analysts say the local unit continues to post heavy losses on the interbank market as unrelenting foreign exchange demand continued to weigh down the cedi against the dollar.
Demand exceeded supply by last BoG Forex Forward Auctioning
The last Forex Forward by the Bank of Ghana indicated that demand exceeded supply by $75.25 million in the latest auction.
This is compared with the $82.75 million recorded a month ago.
Cedi loses 40% in value to the dollar – Bloomberg
Bloomberg quotation had earlier put the depreciation of the Ghana cedi at 40.05% in value to the US dollar in nine months of 2022.
This ranked it as the second worst-performing currency in the world in the 147th position, according to Bloomberg.
Also, this decline in the local currency against the American currency is the worst in over three decades.
Cedi loses 37.5% in value to a dollar as of September 30, 2022 – BoG
However, the Bank of Ghana said the Ghana cedi depreciated by 37.5% to the US dollar as of the end of September 2022.
At the same time, the cedi had depreciated by 24.1%, and 27.5% against the Pound, and Euro.
Meanwhile on Wednesday, major stock market indexes across Asia fell sharply.
Hong Kong‘s Hang Seng index closed 3.4% lower, Japan’s benchmark Nikkei index closed 1.5% lower and the Kospi in South Korea ended the day down by 2.4%.
Many investors see the dollar as a safe place to put their money in times of trouble.
That has helped to drive up its value against other currencies, including the British pound – which hit an all-time low against the dollar on Monday.
Also on Wednesday, the dollar reached a fresh 20-year high against a closely-watched group of leading global currencies.
The yuan’s slide is yet another example of a currency weakening as a result of the strong dollar.
It is also about the very different paths China and the United States are taking in response to economic issues at home.
The PBOC has been easing interest rates to revive growth in an economy ravaged by Covid lockdowns, while the US Federal Reserve is moving aggressively in the opposite direction as it tries to control inflation.
Such a divergence is not wholly problematic, Joseph Capurso, head of international and sustainable economics at the Commonwealth Bank of Australia told the BBC.
The fall in the currency’s value can actually be helpful for exporters within China, he said, because it would make their goods cheaper and so could increase demand.
That said, exports only make up 20% of the Chinese economy these days, so a weak yuan will not turn around fundamental weakness domestically largely caused by Beijing’s zero-Covid strategy and a property crisis, said Mr Capurso.
A weaker currency can also lead to investors pulling their money out of the country and uncertainty in financial markets – something Chinese officials will want to avoid with the Communist Party Congress coming up next month.
The yuan’s fall has caused weakness in other currencies of developed economies in the region, including the Australian and Singapore dollar as well as the South Korean won.
Last week, the Bank of Japan intervened to support the yen for the first time since 1998, after the currency weakened against the dollar.
Asia’s emerging markets are vulnerable too – as they sell raw materials and components to China’s factories and so have increasingly become dependent on the yuan.
Washington has in the past accused China of intentionally devaluing its currency to keep exports cheap and imports from the US expensive.
While the strong dollar has rattled world markets, it is unlikely to deter the Fed from continuing to raise rates.
“The strong dollar is working for the US market,” Dimitri Zabelin at the London School of Economics’ foreign policy think-tank said.
“It will be a consideration but it will not weigh as heavy as domestic concern about inflation.”
China’s central bank has been trying to slow the yuan’s slide by making it more expensive to bet against the currency. The People’s Bank of China (PBOC) also cut how much foreign currency banks have to hold.
After a flurry of events last week, US markets and foreign equities were neutral on Monday morning.
US stocks were mixed, oil prices were choppy, and the dollar and Treasury yields rose on Monday, with Wall Street digesting a raft of macroeconomic news.
The moves came after sterling slumped to a record low earlier in the day, before recovering, and a renewed selloff in British gilts pushed euro zone bond yields higher as the reaction to last week’s fiscal statement in the United Kingdom again roiled markets.
US stocks were mixed to start the week – the Dow Jones Industrial Average dipped about 0.5 percent and the S&P 500 fell nearly 0.3 percent, while the Nasdaq Composite gained 0.4 percent.
Global equities were also mixed after initially sliding on concerns about high-interest rates continued to put pressure on the financial system. Reaction to Italy’s election result, where a right-wing alliance won a clear majority, was muted.
Europe’s STOXX 600 index at first slipped to hit a new low in December 2020 but then swung back for a slight 0.1 percent gain on the day. Asian stocks fell 1.45 percent.
“I think everyone felt they were swimming in a tsunami of newsflow last week after one of the most incredible macro weeks in recent memory,” Deutsche Bank strategist Jim Reid wrote in a client note on Monday.
The pound skidded to an all-time low against the dollar, the last trading down about 0.4 percent, as investors waited to see if the Bank of England will intervene to calm concerns over government plans that could stretch the country’s finances.
Sterling’s declines are partly due to dollar strength. The dollar index, which tracks the greenback against six peers, hit a new 20-year top of 114.58 in early trade. It was last at $113.5, up about 0.36 percent.
The tumble is leading to speculation the Bank of England will have to hold an emergency meeting to raise rates.
“The Bank of England is in a very difficult spot where if they don’t react, they risk another sterling collapse and things getting very messy,” said Mike Riddell, senior portfolio manager, Allianz Global Investors. “If they do react, a developed market hiking rate to defend the currency looks like an emerging market. So they’re damned if they do, damned if they don’t.”
Stress building
European government bonds were also hit. Five-year UK government bond yields jumped 50 basis points to their highest since October 2008, sending euro zone bond yields higher. Germany’s 10-year government bond yield hit its highest since December 2011 at 2.132 percent, and Italy’s benchmark bond yields rose to their highest since 2013.
In the United States, Treasury yields also rose to new highs on Monday amid concerns that central banks globally will keep tightening monetary policy to curb stubbornly high inflation.
Two-year Treasury yields, which tend to be more sensitive to interest rate changes, rose to a new 15-year high of 4.237, and benchmark 10-year note yields were up about 5 basis points from their Friday close, climbing to 3.746 percent.
Oil prices hit nine-month lows on Monday before recovering to stand higher on the day in choppy trade, as recession fears and a strong dollar spooked the market where participants were waiting for details on new sanctions on Russia.
Brent crude futures for November settlement were up about 0.9 percent, at $86.95 a barrel, having earlier fallen as far as $84.51, the lowest since January 14.
Gold prices edged up from a two-and-a-half-year low on Monday as the dollar pulled back slightly from its two-decade peak, offering some support to bullion in the face of jitters over rising US interest rates.
“There has been an economic logic at play, as central banks raised rates to drive monetary policy into restrictive territory, get below trend growth for a while – a polite way of saying a recession – and then you get lower inflation,” said Samy Chaar, chief economist at Lombard Odier.
“The question is whether the financial world can go through that sequence. It feels like we are reaching the limit of that, things are starting to break, for example, what we see with sterling.”
The great tech selloff of 2022 is far from over as investors brace for earnings misses that may spur a more than 10% plunge in the Nasdaq 100.
More than two-thirds of 914 respondents in the MLIV Pulse survey think profits of the technology companies will disappoint the market throughout 2022.
Firms including Alphabet Inc.’s Google are at risk of advertisers cutting spending as the global economy struggles, while streaming services including Netflix Inc. face an exodus of price-sensitive subscribers with consumers tightening their belts.
The Nasdaq 100 is down about 31% so far this year, wiping trillions of dollars in market value, as investors reassess the post-pandemic value of many business models. Interest-rate hikes are hitting stocks and diminishing the value of their future earnings. Inflation is driving up costs, while a stronger dollar is weighing on profits and the threat of recession is growing.
Retailers such as Amazon.com Inc. are finding some their direct responses to the Covid-19 pandemic — such as massive investments in warehouses and workers to pack products in them — are coming back to bite them.
Futures on the Nasdaq 100 fell 0.5% in Monday trading as global risk assets extended their selloff.
Apple Inc. said it will raise the price of its App Store purchases across Asia and countries that use the euro, as the value of foreign currencies collapses relative to the dollar.
Microsoft Corp. lowered its forecast because of the currency’s strength in June. And in July, Sony Group Corp. warned investors about the impact of the global economic slowdown, especially in Europe, and the adverse effects of the strong dollar on its financial results.
The Bloomberg dollar index, which tracks greenback’s performance against 10 leading global currencies, has set new record since those announcements were made.
Tech’s earnings are projected to lag the S&P 500 in the third and fourth quarters. Info tech’s earnings per share are estimated to fall 6.6% year-over-year in the third quarter, compared to a 3.2% gain for the overall S&P 500, according to Bloomberg Intelligence data. The Nasdaq 100’s 12-month forward EPS has dropped about 2.9% since June 1, compared to a 0.8% drop for the S&P 500.
Meanwhile, retail and professional investors are also bearish on the metaverse. More than 70% of MLIV Pulse respondents said they knew what the metaverse was but that it won’t change the way they interact with people and businesses over the next two years. The sentiment sits awkwardly with how Mark Zuckerberg described the metaverse’s potential. It’s “the next frontier,” he said when the billionaire changed his company’s name from Facebook to Meta Platforms Inc.
His company said that investments in Reality Labs, the Meta division that makes hardware such as virtual-reality headsets, reduced operating profit by $10 billion in 2021.
Computer-graphics chipmaker Nvidia Corp. wants its Omniverse platform to power some of the underlying framework for the metaverse, as does software-maker Unity Software Inc. Innumerable technology companies, both massive and minuscule, have big ambitions for the metaverse. Yet despite the grand promise from industry leaders, MLIV respondents are muted in their enthusiasm for its potential.
On the bright side, technology companies that focus on sustainable and power-efficient products are likely to benefit from the unprecedented energy crisis in the wake of Russia’s invasion of Ukraine. After Russia restricted natural gas supplies to heavily-reliant neighbors, electricity prices surged to record levels, and governments are fighting off a potential economic collapse.
Investors see high power bills and scarcity of fuels boosting the development of green solutions. Retail players were the most optimistic, with 63% of respondents saying they believed a gas-and-oil crisis would encourage the development of sustainable electronics. Sixty percent of professional respondents agreed.
“If we had invested more in energy efficiency, and invested more in renewable energy, then we would be in a better position,” Rachel Kyte, the dean of the Fletcher School at Tufts University, said in a Bloomberg TV interview.
“The nearly 5x surge in European gas prices over the past 12 months is providing a nice tailwind for clean energy equipment suppliers with companies like SolarEdge or Enphase on track to boost sales by more than 50% this year,” said Bloomberg Intelligence Senior Clean Energy Analyst Rob Barnett.
Respondents are somewhat more sanguine when it comes to their positioning. About a third said they planned to increase their exposure to tech stocks, just under a third said they’d reduce it, and the rest said they’d hold steady over the next six months.
Tech remains attractive on some metrics, such as the current price-to-earnings ratio compared to its 10-year average, while companies like Apple are still big cash generators. More generally, it’s hard to avoid tech — the S&P 500’s biggest sector by far at almost 27%.
The British pound fell to a new record low against the US dollar of $1.035 on Monday, plummeting more than 4%.
The slide came as trading opened in Asia and Australia on Monday, extending a 2.6% dive from Friday — and spurring predictions the pound could plunge to parity with the US dollar in the coming months.
The unprecedented currency slump follows British Chancellor of the Exchequer Kwasi Kwarteng‘s announcement on Friday that the United Kingdom would impose the biggest tax cuts in 50 years at the same time as boosting spending.
The new tax-slashing fiscal measures, which include scrapping plans for rising corporation tax and slashing the cap on bankers’ bonuses, have been criticized as “trickle-down economics” by the opposition Labour party and even lambasted by members of the Chancellor’s own Conservative party.
Former Tory chancellor Lord Ken Clarke criticized the tax cuts on Sunday, saying it could lead to the collapse of the pound.
“I’m afraid that’s the kind of thing that’s usually tried in Latin American countries without success,” Clarke said in an interview with BBC radio.
The pound has been hammered by a string of weak economic data, but also the steep ascent of the US dollar, a safe haven investment that sees inflows in times of uncertainty.
The euro also hit a 20-year low of 0.964 per dollar. But the economic outlook in the UK means the pound is suffering more than most, in the face of a disastrous energy crunch and the highest inflation among G7 nations.
The previous record low for the British pound against the US dollar was 37 years ago on February 25, 1985, when 1 pound was worth $1.054.
“Should there be any escalation to the war in Ukraine…we would see further sharp downside in the Pound as well as the Euro,” said Clifford Bennett, chief economist at ACY Securities, an Australian brokerage firm.
“One should not underestimate the crisis that is all of Europe at the moment and the Pound is more vulnerable than most,” he said.
Asian markets and currencies crack
The soaring US dollar also sent major Asian currencies tumbling on Monday.
China’s yuan slid 0.5% on the onshore market to the lowest level in more than 28 months. The offshore yuan fell 0.4%.
The rapid declines prompted the People’s Bank of China toimpose a risk reserve requirement of 20% on banks’ foreign exchange forward sales to clients, starting Wednesday. The move would make it more costly for traders to buy foreign currencies via derivatives, which might slow the pace of the yuan’s declines.
Elsewhere in the region, the Japanese yen dropped 0.6% against the dollar to 144. Last Thursday, the Japanese central bank intervened in the currency market for the first time since 1998 to prop up the yen. The yen rebounded slightly following the intervention, but soon resumed the slide.
The Korean won also plunged 1.6% on Monday versus the greenback, falling below the 1,420 level for the first time since 2009.
Stock markets in the region were in a turmoil on Monday, after US stocks sold off on Friday as recession fears grow.
South Korea’s Kospi (KOSPI) declined 2.7%, Japan’s Nikkei 225 (N225) dropped 2.4%, and Australia’s S&P/ASX 200 was down 1.4%. China’s Shanghai Composite Index (SHCOMP) dipped 0.1%.
“Risk sentiments have been dealt a major blow by the Fed’s latest policy action and guidance,” said DBS analysts in a research report on Monday.
The Federal Reserve on Wednesday approved a third consecutive 75-basis-point hike in an aggressive move to tackle white-hot inflation that has been plaguing the US economy.
Even without the Fed action, Europe is looking at a recession due to the war in Ukraine, and China is looking at “a substantially weak growth dynamic” because of a variety of domestic factors, the DBS analysts said.
“Add on top of that a sharp decline in US dollar liquidity and sharply higher US interest rates, the world economic outlook looks particularly precarious,” they added.
Information from Afriswap Bureau De Change, a forex bureau in Accra, indicates that the United States Dollar is selling at GH¢10.12.
However, the dollar is being bought at a rate of GH¢9.90 as of September 5, 2022.
The British pound sterling is being bought at a rate of GH¢11.32 and sold at a rate of GH¢11.72, while the Euro is traded a rate of GH¢9.77 and sold at a rate of GH¢10.05.
On the Interbank forex rates from the Bank of Ghana today, the Ghana Cedi is trading against the dollar at a buying price of 8.2294 and a selling price of 8.2376.
Last Friday’s rate showed that the dollar was traded at a buying price of 8.2284 and a selling price of 8.2366.
Per the BoG’s website, the Cedi is currently trading at a buying price of 9.5313 and a selling price of 9.5416 against the Pound Sterling.
Also, the Euro is trading at a buying price of GH¢8.2522 and a selling price of GH¢8.2604.
The South African Rand is trading at a buying price of 0.4780 and a selling price of 0.4785, but on the forex bureau, it is being bought at a rate of 0.45 and sold at a rate of 0.80.
Nigerian Naira is being bought at a rate of 12.00 Naira for every 1 Cedi and sold at a rate of 15.50 at forex bureaus.
These rates are not constant as they differ from time to time and from forex to forex.
Dollar General (DG) and Dollar Tree (DLTR) both reported solid increases in sales for the second quarter Thursday. But both companies raised concerns about the impact that inflation may have on future results.
Dollar Tree CEO Mike Witynski said in the company’s earnings release that shoppers are being “pressured by higher costs for food, fuel, rent and more.” Meanwhile, Dollar General CEO Todd Vasos described the quarter as a “period of inflation and economic uncertainty.”
Dollar General seems to be holding up better than Dollar Tree. Overall sales at Dollar General jumped 9% from a year ago, compared to a 6.7% rise at Dollar Tree, which also owns the Family Dollar chain.
Dollar General didn’t cut its outlook, while Dollar Tree issued weaker guidance. That’s likely one of the key reasons why Dollar General shares were down just 1% Thursday morning as Dollar Tree tumbled 9%.
Dollar Tree is also dealing with some customer backlash following last year’s controversial decision to raise prices, a move that spurred some consumers to derisively refer to the chain as “$1.25 Tree.”
But there are cracks beneath the surface at Dollar General, too. The company said in its earnings report that apparel sales plunged more than 20% from the same period last year. Sales of seasonal and home products also were down slightly.
Although those categories make up only about 20% of Dollar General’s overall revenue, they have bigger profit margins than the core “consumables” business of food, beverages and drugstore items that account for the remainder of Dollar General’s sales.
Witynski acknowledged this trend as well during a conference call with analysts Thursday, saying that more of the company’s customers are “gravitating to needs-based consumables, which is impacting our margin.”
“Consumers continue to be burdened by levels of inflation not experienced in decades,” Witynski said, also noting that “our suppliers are being hit by inflation as well.”
Getting products from warehouses to stores remains a problem. Vasos said during Dollar General’s analyst call that there are “ongoing supply chain pressures.” He added that the company is hoping to alleviate this problem by building three new distribution centers in the US.
The rival dollar store chains also announced executive moves Thursday.
Dollar General is promoting chief financial officer John Garratt to president, and retain the CFO role. Dollar Tree announced it hired a new CFO, with Jeffrey Davis taking over for Kevin Wampler. Davis previously worked at Walmart, J.C. Penney, Olive Garden owner Darden (DRI) and Qurate (QRTEA), the parent company of HSN and QVC.
Wampler will stay on as an advisor through April. Dollar Tree had previously announced in June that he would be stepping down as CFO after activist investor Mantle Ridge pressed Dollar Tree for board and management changes.
Despite continued sales momentum at dollar stores, there are growing concerns about the health of the US consumer. Although Walmart (WMT) recently posted better than expected results, the retail giant had warned in late July that it was cutting its outlook for the second quarter and rest of the year.
Walmart rival Target (TGT) recently reported similarly disappointing results. And two other retailers issued poor guidance Thursday morning: apparel retailers Abercrombie & Fitch (ANF) and Burlington Stores (BURL).
The Cedi, which traded against the dollar at a mid-rate of 8.0301, is currently selling at GH¢9.45 to the US dollar as of August 11, 2022.
The situation has resulted in citizens calling on the government led by President Akufo-Addo and his vice, Dr Mahamudu Bawumia, to ‘arrest’ the dollar as they promised.
“Ghana sika sÉ›m ayÉ› basaaa. Wowww. The pressure is getting worser,” the singer wrote in reaction to a tweet by one of his fans who expressed shock about the rate of a dollar to the cedi: “Herhh dollar hit 9 and coins.”
According to a GhanaWeb Business report, the dollar is being bought at a rate of 9.18 and sold at a rate of 9.45 at a forex bureau in Accra.
Against the Pound Sterling, the Cedi is trading at a buying price of 9.8223 and a selling price of 9.8330 as compared to yesterday’s trading at a buying price of 9.6890 and a selling price of 9.6995.
At a forex bureau in Accra, the pound sterling is being bought at a rate of 10.80 and sold at a rate of 11.10.
