By Market watchers and analysts at GCB Capital hold an optimistic view regarding the cedi’s performance for the remainder of the year, foreseeing the Ghanaian currency stabilizing by mid-2024.
Since February 2024, the cedi has faced a rapid depreciation trend primarily driven by sustained corporate forex demand pressures. Nonetheless, despite this depreciation, key economic indicators in Ghana indicate an improving macroeconomic landscape.
Projections suggest that the country’s GDP growth will see a slight uptick from 2.9% in 2023 to 3.3% by the end of 2024, while average inflation is anticipated to decrease from 38% in 2023 to 18% in 2024.
In efforts to bolster the local currency, the Central Bank intervened by selling US$13 million in the spot market earlier this week and also allocated $20 million to Bulk Oil Distribution Companies (BDCs) in the 51st auction. Despite these measures, the cedi experienced some depreciation against major trading currencies in the first quarter of 2024, albeit at notably lower rates compared to previous years.
Courage Boti, the lead researcher at GCB Capital, is buoyed by recent developments, viewing them as promising signs for the cedi’s stability in the foreseeable future. He attributes this optimism to the improving macroeconomic environment and the potential for heightened absorption of forex demand through the Bank of Ghana’s auctions.
“In my engagement with the traders, what they see is a pile-up of demands from the corporate sector, largely the BDCs, who are just about more or less 20% of the IFAX needs from the BDCs auction that the Bank of Ghana conducts every fortnight. So, they source the rest from the open markets and also from the other corporate sectors. You could immediately think about things like the seasonal trends that we know from before; dividends repatriation in the second quarter.”
