Ghana’s currency, the cedi, has been a topic of concern among economic stakeholders for some time now. Its constant depreciation against major currencies such as the US dollar, British pound, and euro has been a source of worry for many, especially those involved in international trade. However, there seems to be light at the end of the tunnel as Fitch Solutions predicts that the cedi will end the year on a strong note, with an exchange rate of ¢12.40 to one US dollar.
According to the research and market information firm, the cedi’s stabilisation will be made possible through the expected International Monetary Fund (IMF) support programme which Ghana is set to secure by May 2023. This programme will help cushion the cedi against foreign exchange pressures and restore the currency’s value.
Fitch Solutions argues that while short-term exchange rate volatility will persist, it believes the cedi will stabilise once a formal creditors’ committee is formed, and the IMF executive board approves Ghana’s programme. This news will bring hope to many who have been following the currency’s progress with keen interest.
Last year, the cedi recorded a 38% depreciation against the US dollar, which was a major cause for concern for many. However, the predicted rate of depreciation for 2023, at just 12.40 to one US dollar, is far lower than the previous year’s figure. This means that the currency will be more stable, and Ghana’s international trade partners can breathe a sigh of relief.
Although the cedi has lost about 14% of its value to the US dollar on the retail market, selling at about ¢12, it has lost about 21% in value to the American greenback on the interbank forex market, going for about ¢10.95. This has caused anxiety among some market watchers who are unsure of what the future holds for the currency.
However, Fitch Solutions believes that the cedi will stabilise once the IMF support programme is secured. It is expected that this programme will help to reduce the cedi’s volatility, which has been a significant challenge for the Ghanaian economy.
The local currency has posted mixed performance on the markets over the past two weeks, despite the Central Bank increasing its intervention in the spot market. This has been due to the heightened demand for foreign exchange as a result of market uncertainties. Last week, the cedi lost 1.03% week-on-week against the dollar, closing at a mid-rate of ¢12.10 to one US dollar. It also lost 1.34% against the pound and 0.96% against the euro.
While the future of the cedi remains somewhat uncertain, the predicted stabilisation by Fitch Solutions will bring hope to many Ghanaians. The anticipated IMF support programme is seen as a crucial step towards strengthening the country’s economy and restoring the cedi’s value. It is hoped that the cedi will continue to perform well on the international market, providing a much-needed boost to the Ghanaian economy.
