Fitch Solutions, an international rating agency, forecasts a stable exchange rate for the Ghanaian cedi (GHS) in the first quarter of 2024.
The prediction is based on expectations of a gradual improvement in investor sentiment and the receipt of a US$600 million disbursement from the International Monetary Fund (IMF).
According to the agency’s report on interest rates and inflationary dynamics for 2024, it anticipates that the cedi will hover around GHS12.0/USD during the first quarter. This projection is only marginally weaker than the average of GHS11.8 to a USD observed in the corresponding period of the previous year.
Fitch Solutions suggests that these factors, coupled with ongoing disinflationary trends, will limit price pressures on imported goods and services in the upcoming months.
However, the rating agency notes that inflation is expected to remain above the 20 percent threshold leading up to the March Monetary Policy Committee (MPC) meeting. This is likely to prompt a vigilant approach from central bank policymakers.
“In the coming months, price pressures will moderate at a much slower pace compared to the final quarter of 2023. This is partly due to the uptick in global oil prices caused by hostilities between Israel and Hamas, and a sharp increase in global shipping costs caused by rising tensions in the Red Sea. Consequently, inflation rates are set to stay well above the levels preferred by the Bank of Ghana with significant upside risks,’’ the report said.
The rating agency stated that this scenario supported their prediction that the central bank would decide against choosing to implement a more significant rate cut during the March MPC meeting.