According to Fitch Solutions, the Ghana Cedi is projected to recover some of its losses against the dollar in the coming months.
According to the London-based firm, this is attributable to greater investor confidence, dollar inflows, and improved external circumstances.
According to an article titled “Sub-Saharan Africa Currency Round-Up: Greater Stability Ahead in Second Half of 2024,” external factors are expected to give additional support to Sub-Saharan African currencies in the next quarters.
The London-based ratings firm believes the Ghanaian cedi would fare better in the second half of 2024. So far this year, the cedi has lost around 20% of its value against the US dollar, making it one of the world’s worst-performing currencies.
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Weak capital inflows owing to negative market sentiment and continuing debt restructuring discussions have contributed to the drop. However, the commencement of an economic rebound, with real GDP growth rising from 3.8% in Q4 2023 to 4.7% year on year in Q1 2024, has raised demand for foreign exchange.
Ghana’s overseas reserves remained low, covering about 2.5 months of imports as of March. Along with IMF accords that let the currency rate to react to market factors.
Fitch Solutions predicts that the cedi will regain 9.0% of its value by the end of the year, starting from July 9, 2024.
On July 8, Ghana achieved a deal with foreign bondholders to restructure US$13 billion in external debt. The procedure is planned to be completed by the end of September 2024.
Fitch Solutions made it known that “this restructuring will improve investor sentiment towards Ghana, enhance capital inflows, and apply appreciatory pressure on the cedi” .
