Weekly Highlights

? Monetary Policy Rate (MPR) unchanged at 14.50 percent.
? The GSE recovered some of its recent losses.
? The Cedi marginally depreciated against the US Dollar.
? The US equity indices closed mixed.
? Gold jumped to a 4-year high buoyed by safe haven demands.

Macroeconomic Update

Monetary Policy Rate unchanged at 14.50 percent.

The Monetary Policy Committee of the Bank of Ghana has left the policy rate unchanged at 14.50 percent after a review of the domestic economy and implications of the recent changes in the global market. On the international front, the committee cited uncertainties in the global economy characterised by a drop in economic activities and fears of second wave of infections albeit, signs of recovery. On the domestic economy, mixed data ranging from moderation in Bank of Ghana Composite Index of Economic Activity, inflationary pressures and upbeat GDP data were some factors responsible for the maintenance of the policy rate. The committee, however, struck an optimistic tone on the return of inflation to the medium-term target band by the second quarter of 2021. Given the widening budget deficit and a the short-fall in financing created by the covid-19 pandemic, the committee exercised monetary restraint to maintain macroeconomic stability.

Ghana Economic Data

Indicator 2017 2018 2019 2020 2020
Target Actual
Inflation CPI (y-o-y %) 11.8 9.40 7.90 8.00 11.20
Inflation PPI (y-o-y %) 8.9 4.40 13.00 n/a 7.40
Monetary Policy Rate (%) 20.0 17.0 16.00 n/a 14.50
GDP Growth (y-o-y %) 8.5 6.3 6.5 6.8 n/a
Budget Deficit (% of GDP 5.9 3.8 4.5Sep 4.7 n/a
Public Debt (% of GDP) 69.8 57.6 63.00 n/a n/a
Fx. Reserves (M. Cover) 4.3 3.7 4.1 ?3.5 n/a
Source: BOG; MOFEP; GSS. * represents provisional estimate

Government of Ghana Treasury Securities

Treasury Bills, Notes & Bonds (%)
Date 91-Day 182-day 364-day 2-Yr 3-Yr 5-Yr
Aug 03 – 08 13.99 14.05 16.82 18.75 18.85 19.25
Jul 27 – 31 13.97 14.05 16.82 18.75 18.85 19.25
Jul 20 – 25 13.87 14.06 16.92 18.75 18.85 19.25
2020 Yr.Open 14.70 15.15 17.90 20.95 19.70 19.50
NB: The above are the annual yields on Government of Ghana Treasury Securities.

Yields on Government of Ghana Treasury Securities recorded mixed adjustment. The interest rate on the 91-Day T-Bill widened by 2 basis points to close at 13.99 percent but yields on the 182–Day and 364-Day T-Bills remained unchanged at 14.05 percent and 16.82 percent, respectively. Interest rates on the other treasury notes and bonds were also unaltered as they were not scheduled for the week’s auction.

Results of Auction held on 30th July, 2020

Bill Bids Tendered GHS (Million) Bids Accepted GHS (Million) Interest Rate (%)
91-Day T-Bill 544.76 544.76 13.9933
182-Day T-Bill 122.50 122.50 14.0520

At the close of the week’s auction, Government accepted all the GHS667.26 million bids tendered at the week's auction. The amount raised exceeded the week’s target of GHS617.00 million but fell short of the GHS1,063.42 raised at the previous week’s auction. The 91-Day Bill dominated Government’s purchase as it constituted 81.64 percent of the total bids purchased. The target for next week’s auction has been pegged at GHS1,225.00 million and is expected to be raised from the issuance of the 91-Day, 182-Day and 364 Day T-Bills.

Illustrated in the above diagram, is the term structure of the Government of Ghana treasury structure. The yield curve maintained its normality following the commitment by the Central Bank to lengthen the term structure of Government securities whiles making returns on long-dated treasury securities, much attractive than others. The continued investor appetite for safe-haven instruments despite cooling COVID-19 fears is a major factor for normality of the yield curve.

Ghana Stock Exchange

Ghana Stock Exchange (GSE) Indices (YTD %)
Year 2016 2017 2018 2019 2020
GSE-CI -15.33 52.73 -0.29 -12.25 -16.81
GSE-FSI -19.93 49.51 -6.79 -6.23 -14.30

The Ghana Stock Exchange recovered some of its recent losses as it ended the truncated week in the gains. This was on account of price gains posted by some financial and telecom stocks. The GSE Composite Index rose by 0.80 percent to settle at an index level of 1,877.64 points, representing a year-to-date loss of 16.81 percent. The GSE Financial Stocks Index also upturned by 0.32 percent to settle at 1,730.78 points, corresponding to a year-to-date loss of 14.30 percent.

GSE Market Indicators
Wk. Open Wk. End Change (%)
Total Volume Traded (M) 32.77 0.23 -99.30
Total Value Traded (GHS M) 19.51 0.30 -98.46
Market Cap (GHS M) 52,567.82 52,722.06 0.29

A total of 233,527 shares valued at GHS 298,697.00 exchanged hands after the week's trade. This represent 99.30 percent decline over the previous week’s outturn. MTN Ghana Ltd emerged as the most actively traded stock accounting for 29.78 percent of the overall traded volume. Market capitalization jumped by 0.29 percent to settle at GHS 52,722.06 million.

Stock Price Movements

On price movements, CAL Bank Ltd and MTN Ghana Ltd upped their share values by 5 pesewas and a pesewa to close at 70 pesewas per share and 57 pesewas per share, respectively. There were, however, no laggards recorded on the bourse.

Stock Price Advancers in terms of WK closing prices
Equity Yr. Open Wk. Open Wk. End Wk. Change (GHS) YTD (%)
CAL 0.89 0.65 0.70 0.05 -21.35
MTNGH 0.70 0.56 0.57 0.01 -18.57

Currency Market

Currency Buying Selling Currency Buying Selling
USD 5.6754 5.6810 CAD 4.2243 4.2286
GBP 7.4001 7.4098 CFA 97.9450 98.0284
EUR 6.6915 6.6972 JPY 0.0540 0.0541
AUD 4.0501 4.0569 ZAR 0.3355 0.3359
NGN 67.0107 67.1868 CNY 0.8091 0.8101
Source: Bank of Ghana 30.07.2020

On the interbank currency market, the Ghana Cedi depreciated against all the 3 major trading currencies. The US Dollar dimmed it's shine on the global currency market following the release of downbeat GDP and unemployment data from the US. US economic activities recorded an annualized contraction of 32.9 percent in the period of April-June. Unemployment claims in the world’s largest economy for week ended July 25 also rose by 12,000 to settle at 1.43 million underscoring an economic downturn. In spite of the greenback’s loss, it marginally appreciated by 0.01 percent to sell at GHS5.68 on the interbank forex market. The year-to-date depreciation of the Cedi remained unchanged at 2.54 percent.

The British Pound jumped to a month-high ahead of Bank of England’s policy meeting, whiles drawing support from the dollar's downturn. The Pound benefitted from the greenback’s weakness as investors eyed Bank of England’s policy meeting for cues on the base rate and other policy directives. The British Pound thus rose by 1.98 percent to exchange at GHS7.41 on the interbank currency market. The year-to-date depreciation of the Cedi thus rose to 1.21 percent.

The Euro closed higher spurred by strong economic data and investor’s optimism on the outlook of the bloc. The Single currency rode on upbeat IFO Business climate Index in Germany, which upped from 86.3 in June to 90.5 in July signalling improving consumer sentiments. The Euro thus appreciated by 1.32 percent to sell at GHS6.70 on the interbank currency market. The year-to-date depreciation of the Cedi thus widened to 7.23 percent.

International Markets

Stock Indices
Wk. Open Wk. Close Change (%) YTD (%)
S&P 500 Index 3,215.63 3,271.12 1.73 1.25
DJIA 26,469.89 26,428.32 -0.16 -7.39
FTSE 100 6,123.82 5,897.76 -3.69 -21.81
NIKKEI 225 22,751.61 21,710.00 -4.58 -8.23
FTSE/JSE All Share 55,645.65 55,721.80 0.14 -2.39
NSE All Share 24,427.73 24,693.73 1.09 -8.00
Nairobi All Share 134.59 134.48 -0.08 -19.19

US equity indices closed mixed as weak economic data muted the impact of better-than-expected second quarter earnings by some listed firms. Technology giants Apple, Amazon, Facebook and Alphabet posted strong earnings results for the second quarter of 2020 that buoyed investor’s risk taking appetite on the bourse. Gains were however trimmed by weak GDP data which sparked uncertainties on the potential of an economic recovery of the US economy. The S&P 500 advanced by 1.73 percent to settle at an index level of 3,271.12 points. The Dow Jones Industrial Average, on the other hand, slipped by 0.16 percent to end the week at 26,428.32 points.

The London Stock Exchange fell to a 2-month low driven by UK Prime minister-Boris Johnson’s decision to postpone a planned easing of restrictions on the economy following a surge in covod-19 cases. The FTSE 100 thus trimmed 3.69 percent in the trading week to close at 5,897.76 points.

The Nikkei 225 tumbled on account of sell-offs posted by shares in the Paper & Pup, Railway & Bus and Real Estate sectors which lifted the benchmark index. On the back of this, the Nikkei 225 thus slumped by 4.58 percent close at 21,710.00 points.

The African equity market closed with the Nigerian All Share Index rising by 1.09 percent to close at 24,693.73 points. The Johannesburg All Share Index recorded a week-on-week gain of 0.14 percent to settle at 55,721.80 points. The Nairobi All Share Index, on the flip side, recorded a weekly gain of 1.77 percent to settle at 134.59 points.

Commodities
Wk. Open Wk. Close Change
(%) YTD (%)
Crude Oil $/barrel 43.34 43.3 -0.09 -34.39
Gold $/ounce 1,897.50 1,973.90 4.03 29.60
Cocoa$/metric tonne 2,224.00 2,400.00 7.91 -5.51
Coffee $/pound 1.084 1.1895 9.73 -8.29
Source:www.bloomberg.com, & www.investing.com -

Brent crude oil tumbled as investors weighed uncertainties in global demand vis-a-vis fears of a global glut. Oil markets were affected by fears of a second of covid-19 infections which threatened global demand amid the decision by OPEC and its allies to scale up production to 1.5 million barrels per day in August. Brent crude oil thus declined by 0.09 percent to close at $43.30 per barrel.

Gold jumped to a 4-year high boosted by the weakness of the US dollar and the decision by the US Fed to leave interest rates unchanged at their current level of between 0-0.25 percent which sparked demand for the safe haven asset. Gold thus rose by 4.03 percent to trade at $ 1,973.90 per ounce.

Cocoa sustained its gains on the international commodities market as the below-average rainfall in major growing regions of top grower-Ivory Coast affected supply of the beans. Cocoa thus soared by 7.91 percent to settle at $ 2,400.00 per metric tonne.

Coffee posted a second-straight weekly gain driven by a slump in production in Vietnam and Brazil owing to a surge in covid-19 cases. Coffee edged up 9.73 percent to close at $1.19 per pound.

Note: The data in this publication is Friday on Friday (w/w)