Cedi’s stability hinging on MoU with Official Creditors
In the waning days of 2024, the Cedi demonstrated resilience, buoyed by a moderated demand environment that provided a semblance of stability. Closing the year with a 27.8% depreciation against the US dollar on the interbank reference market, the Cedi’s performance underscores a marked improvement, especially when juxtaposed against the alarming 21% depreciation witnessed in Q1 of 2023.
A salient factor underpinning this stability has been the strategic drawdown of approximately US$600 million from the cocoa loan syndication. This move not only infused essential liquidity but also obviated the need for immediate intervention from the Bank of Ghana, which refrained from injecting liquidity support into the market.
However, beneath this veneer of stability, Ghana’s economic trajectory remains nuanced, characterized by fragile recovery and looming fiscal uncertainties exacerbated by the imminent 2024 general elections. Such ambiguities have inevitably subdued investor sentiment, introducing a cautious undertone to the broader economic environment.
Central to recalibrating the Cedi’s near-term trajectory is the potential Memorandum of Understanding (MoU) with official creditors. The timing and contours of this impending agreement on debt restructuring parameters are poised to exert significant influence, potentially defining the currency’s immediate trajectory, provided external factors remain consistent.
In conclusion, the Cedi’s recent resilience, albeit commendable, remains intricately tied to the impending MoU with official creditors. As Ghana navigates this intricate economic landscape, stakeholders, ranging from investors to policymakers, are poised to monitor developments with meticulous attention, cognizant of the profound implications shaping the nation’s fiscal and monetary policies.
