Fitch Solutions has forecasted a recovery for the Ghanaian cedi against the US dollar in the near future, citing improved investor confidence, increased dollar inflows, and favorable external conditions.
In its report titled “Sub-Saharan Africa Currency Round-Up: Greater Stability Ahead in Second Half of 2024,” the London-based firm anticipates stronger support for currencies across Sub-Saharan Africa in the upcoming quarters.
Fitch Solutions expects the Ghanaian cedi to perform better in the second half of 2024, following a decline of approximately 20% against the US dollar earlier this year, marking it as one of the weakest-performing global currencies.
Factors contributing to the cedi’s depreciation include subdued market sentiment and ongoing debt restructuring negotiations, despite signs of economic recovery with real GDP growth accelerating to 4.7% year-on-year in Q1 2024.
Ghana’s international reserves, covering only 2.5 months of imports as of March, alongside IMF agreements allowing market-driven exchange rate adjustments, have also influenced currency dynamics.
The ratings agency projects the cedi to appreciate by 9.0% by year-end, from the spot rate as of July 9, 2024.
Furthermore, Ghana recently finalized a restructuring agreement with international bondholders for US$13 billion of external debt, expected to conclude by September 2024. Fitch Solutions believes this move will bolster investor confidence, increase capital inflows, and further strengthen the cedi.
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