The ripple effects of the recent upward adjustments of transportation fares froze the improving inflation outlook. Inflation, therefore, rose by 0.2 percentage points to 13 per cent in April.

Inflation at the non-food inflation upsurged by 0.7 percentage point to settle at 16.3 per cent, with inflation at the food and non-alcoholic beverages sector declining from 7.3 per cent in March to 6.7 per cent in April. 

In spite of the inflation turnout in April, we expect May’s headline inflation to moderate to a value of 12.70±0.50 per cent and this is on the back drop of waning effect of the recent transportation fee hike, currency stabilisation and government’s focus at bringing inflation to 11.2 per cent by year end. 

Securities auction

Friday’s auction witnessed another moderation in the yields on the Government of Ghana treasury securities. The 91-Day T-Bill, which is now yielding 13.47 per cent, eased by 74 bps from previous week value. The 182-Day T-Bill also declined by 60 bps to 15.32 per cent. The yield on the 1-year fixed note also softened by 150 bps to 16.00 per cent.   

At the close of the auction, out of the GH¢1,355.79 million worth of bids tendered in by investors, a total of GH¢1,130.43 million bids were accepted by the Government. The outturn exceeded the week’s target of GH?1,294.00 million with the purchases of the short-dated treasury securities (91-Day and 182-Day T-Bills) dominating. 

They accounted for 72.25 per cent of the total accepted bids. The next auction which is scheduled on May 19, 2017, the government anticipates raising GH¢913.00 million of the 91-Day and 182-Day T-Bills. 

The yield curve of Government of Ghana treasury securities failed to assume a regular pattern despite the rate moderations. Nevertheless, the exclusion of the 5-year bond, however, exhibits. As treasury yields ease further, especially on the 2-year fixed note and the 3-year bond, a regular pattern is expected to be attained in the next couple of months. 

Stock Price Movements

Price movements was witnessed in 12 equities; eight advancers and four laggards. On the list of the advancers, Benso Oil Palm Plantation gained 21 pesewas to trade at GH¢3.50 per share. Standard Chartered Bank Ltd and Ghana Oil Company Ltd increased by 10 pesewas and 8 pesewas to close at GH¢15.70 per share and GH¢1.41 per share, respectively. Fan Milk Ltd added 3 pesewas to trade at GH¢11.38 per share. Other advancers included CAL Bank Ltd, Ecobank Transnational Incorporated, SIC Ltd and Societe Generale Ghana Ltd. 

The flip side saw Unilever Ghana Ltd trimming 5 pesewas to settle at GH¢9.00 per share in spite of gains reported in its 2016 financials. Aluworks Ltd, Ecobank Ghana Ltd and HFC Bank Ltd also declined by a pesewa each to trade at 15 pesewas, GH¢7.34 and 50 pesewas per share, respectively.  

How the cedi performed

The local currency ended stronger than the Euro and the British Pound in the trading week but lost grounds to the US dollar. The US dollar posted a robust performance against a basket of currencies as upbeat producer price inflation and employment data buoyed the value of the currency. The bullish outlook of the greenback was also supported by US treasury yield rise which solidified expectation for an interest rate hike in June by the Feds. The dollar advanced by 0.37 per cent to trade at GH¢4.21 versus the cedi, settling at a year-to-date appreciation of 0.21 per cent.  

The British pound ended with 0.17 per cent depreciation against the Ghana cedi in spite of the fading market volatility as UK prepares to leave the European union. The pound sterling which witnessed its first weekly loss on the international currency market since Theresa May’s call for an early presidential election was subdued by the downbeat data from UK’s industrial sector and investors apathy against the yet to be released inflation data. These led to believing on an unlikely change to the monetary policy stance of the Bank of England. The pound thus traded at GH?5.43 with a year-to-date appreciation of 4.40 per cent. 

The outturn of France’s presidential election negatively affected the 19-bloc currency as the subdued political risk generated profit taking activities. The Euro thus pulled back from a six-month high on the currency market and also depreciated by 0.24 per cent against the Cedi. The local currency traded at GH¢4.60 per the euro and also closed with a year-to-date depreciation of 3.63 per cent.