Databank Research is forecasting an average end-year depreciation of Ghs 6.18 pesewas of the local currency to the dollar.
The favourable forecast by the research arm of the investment bank, follows expectations that the cedi will replicate its sterling performance against the dollar in 2020.
The cedi last year, cumulatively depreciated against the dollar by 3.9 percentage points making it one of the best-performing currencies in Africa.
Its impressive 3.9 percent depreciation rate for 2020 was also the cedi’s best performance since 2017 when it depreciated by 4.9 percent.
The local currency for the first quarter of 2021, has appreciated by some 0.6 percentage points against the dollar.
Speaking on the outlook of the cedi for this year, senior economist with Databank Research, Courage Martey, noted that although some intermittent depreciation is expected in the course of the year on the back of increased imports due to a pickup in economic activity and recovery process of the economy, the cedi is expected to generally remain stable throughout the year.
“There is a significant support base for the cedi to be able to sustain relative stability throughout the year as it did in 2020. The recent $3 billion Eurobond issuance provides an almost immediate support to the reserves, strengthens the Bank of Ghana’s (BoG) intervention measures, and bodes well for the local currency as far as 2021 is concerned,” he stated.
“We are also aware that there could be intermittent depreciation risks even from the recovery in economic activity as imports demand goes up, but we are very bullish that the BoG will have the resources to be able to avert significant volatility on the market. So generally the outlook is positive on the back of the performance it had in Q1 2021 (1.7 percent appreciation),” he added.
Meanwhile, the Centre for Finance and Inequality Studies, has also projected an average end-year depreciation of Ghs 6.25 pesewas to the dollar for 2021.
At the moment, the cedi’s exchange rate to the dollar, stands at Ghs 5.73 pesewas to a dollar.
