Cedi expected to fare better in coming months – Fitch
The Ghana Cedi is expected to recover some losses against the dollar in the coming months, Fitch Solutions has disclosed.
According to the London-based firm, this is due to enhanced investor confidence, increased dollar inflows, and easing external conditions.
In an article titled “Sub-Saharan Africa Currency Round-Up: Greater Stability Ahead in Second Half of 2024,” it is predicted that external conditions will provide more support to Sub-Saharan African currencies in the coming quarters.
The London-based ratings agency expects the Ghanaian cedi to perform better in the second half of 2024. So far this year, the cedi has lost approximately 20% of its value against the US dollar, making it one of the worst-performing currencies globally.
Weak capital inflows due to subdued market sentiment and ongoing debt restructuring negotiations have contributed to this decline. However, the start of an economic recovery, with real GDP growth accelerating from 3.8% in Q4 2023 to 4.7% year-on-year in Q1 2024, has increased demand for foreign exchange.
Ghana’s international reserves remain low, covering just 2.5 months of imports as of March. Along with IMF agreements allowing the exchange rate to adjust to market conditions.
Fitch Solutions projects that the cedi will regain value by 9.0% by year-end, from the July 9, 2024, spot.
On July 8, Ghana reached an agreement with international bondholders to restructure US$13 billion worth of external debt. This process is expected to be concluded by the end of September 2024.
Fitch Solutions stated that: “this restructuring will improve investor sentiment towards Ghana, enhance capital inflows, and apply appreciatory pressure on the cedi”.
