Cedi records 7% YTD value loss against dollar; ranks as Africa’s 3rd worst-currency
The cedi has lost some seven percentage points in value to its anchor currency the dollar since the beginning of the year.
The loss in value to the greenback has made it the third-worst currency on the African Continent according to Bloomberg.
Market analysts expect the local currency to continue to weaken despite the International Monetary Fund’s $3 billion bailout following the country’s 2022 default.
Kweku Arkoh-Koomson, an economist with Databank is forecasting the cedi to weaken to GHS 13.7 per dollar by the end of the year.
Data compiled by Bloomberg indicates that the Cedi traded almost unchanged at 12.9267 per dollar at 10:41 a.m. in Accra on Monday, March 18, 2024.
Ghana has secured workouts with its domestic and official creditors but is still trying to hammer out a deal with eurobond investors. And while the country’s international reserves have improved to a 10-month high of $5.9 billion in December, they remain too thin to effectively defend the currency.
“Those are weak reserve levels that no one expects to support currency stability,” said Courage Boti, an economist at GCB Capital Ltd who said the cedi would have fallen further already if Ghana had not suspended foreign debt payments.
“Moreover, elections this year is a big risk in terms of foreign exchange demand pressure,” he added.
“One of the policy priorities of the central bank under the IMF program is to rebuild foreign reserves. This means Bank of Ghana will not necessarily intervene in the market the way it should, but just to smoothen volatilities,” Kweku Arkoh-Koomson further noted.
with files from Bloomberg…
