Fitch Solutions has predicted the Ghanaian currency to end the year on a strong note, with an exchange rate of ¢12.40 to one US dollar.
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.
According to the research and market information firm, the cedi’s stabilization will be made possible through the expected International Monetary Fund (IMF) support programme which Ghana is set to secure by May 2023.
The IMF programme, as stated by Fitch, will help cushion the cedi against foreign exchange pressures and restore the currency’s value.
Fitch Solutions argued 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, adding that; “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 by Fitch Solutions 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.
Outlook, Performance Of The Ghana Cedi
Despite the Central Bank increasing its intervention in the spot market, the local currency has posted mixed performance on the markets over the past two weeks,
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 brings hope to many Ghanaians, and showing some optimism and light at the end of the tunnel.
It is hoped that the cedi will continue to perform well on the international market, providing a much-needed boost to the Ghanaian economy.
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