The local currency is expected to depreciate against the U.S. dollar this year trading at some Ghs 6.24 pesewas in the middle of the year.
The depreciation of the cedi according to economic and finance think tank, Centre for Economic Finance and Inequalities Studies in its 2021 Cedi Outlook Report, is further expected to worsen with the local currency hitting Ghs 6.45 pesewas to a dollar later in the year.
The projection by the think tank is premised on the fact that the expected rebound of the Ghanaian economy will not be enough to support the stability of the cedi for this year.
Reduced exports despite the reopening of world economies on the back of the Covid-19 vaccines coupled with revenue shortfalls and increasing budget deficits on the part of government, the think tank notes in its outlook report, will all contribute to the depreciation of the cedi.
On the monetary side, the Centre notes that the forward forex auctions by the Bank of Ghana (BoG), which had gone a long way to stabilise the cedi in 2020, will continue to help in the stabilization of the cedi this year.
However, the cedi’s main challenge for this year, the Centre for Economic Finance and Inequalities Studies argues, will come from the fiscal policies of government as it expects government’s finances to come under pressure this year as more debts are expected to mature.
But some analysts have shared a different view on the depreciation of the cedi, as they believe that with the measures put in place by the BoG – among which is a committed $775 million forward forex auctions for the entire year – the cedi is unlikely to worsen by the end of the year.
The cedi last year, depreciated by 3.9 per cent against the dollar recording one of its best performance against the greenback in recent years.
Meanwhile, the cedi gained marginally on Monday, January 18, against the dollar and now trades at Ghs 5.85 pesewas for a dollar.
The Centre for Economic Finance and Inequalities Studies is made up of senior lecturers of the University of Ghana and Central University College. The think tank primarily focuses on the economy, banking, finance and social issues in the country.
