Fitch Solutions forecasts end-year cedi to dollar rate of GH¢12.25; currency depreciates 11% to dollar

Fitch Solutions is forecasting an end-year cedi to dollar rate of GH¢12.25 to one US dollar, arguing the the Ghanaian cedi will recoup some of its recent losses in the months ahead.

In its Sub-Saharan Africa Currency Round-Up, it said the cedi will strengthen as the government makes progress regarding the restructuring of its commercial debt.

We also expect that the Ghanaian cedi will recoup some of its recent losses in the months ahead, ending the year at GH¢12.25/USD”.

The local currency has depreciated by 11.0% against the US dollar so far this year, positioning it among the worst performing currencies globally.

Indeed, the cedi has been on a rapid depreciatory trend since February 2024, caused by investor concerns over Ghana’s progress of restructuring its commercial debt, as well as the sustained strength of the US dollar. Moreover, Ghana’s international reserves remain low, covering just 2.7 months of imports in February (latest available data), which restricts the Bank of Ghana’s capacity to effectively intervene in the foreign exchange market”, the London-based firm said.

Although a proposed debt deal with international bondholders was rejected by the International Monetary Fund in April 2024, Ghana’s Finance Minister, Dr. Mohammed Amin Adam has stated that “significant progress” has been achieved, which “suggests to us that reaching a debt agreement by mid-2024 should be feasible.

We expect that this will boost investor confidence in Ghana’s economy and policymaking processes, leading to increased foreign exchange inflows and a consequent strengthening of the cedi in half-year 2024”, Fitch Solutions concluded.

Meanwhile, the cedi has lost about 11% in value to the US dollar on the retail market since January 1, 2024.

It is presently being sold by about GH¢12.85 on the average to one American greenback by most forex bureaus.