The Ghanaian Cedi has remained relatively stable in recent weeks following a strong recovery that resulted in the average interbank exchange rate (USD:GHS) dropping from a 2017 high of 4.6042 on March 08, 2017 to 4.2091 at the close of trading on Friday May 12, 2017. As well as dropping marginally against the Euro and Pound Sterling.
The overall performance of the Cedi is underpinned by the higher inflows from bond issues since the beginning of the year, with offshore investors accounting for 90 percent of the funds. As well as the positive response to monetary measures outlined in the 2017 budget.
The development if sustained could impact positively on interest payments, price of petroleum products, the cost of living and the stock market.
Listed companies such as Unilever and Fan Milk are exposed to FX risks via the significant importation of raw materials such as crude palm oil, sugar, milk, tea and packaging materials.
The stability of the Cedi could help to keep a tight lid on the company’s cost of imported raw materials stable, as well as the cost of goods sold. Improved management planning should boost gross profit in 2017.
However, while the company is undoubtedly set to make cost savings from the stability of the local currency, its overall costs could be influenced by other factors especially movement in the prices of raw materials.
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