Research firm IC Securities has forecasted that the Ghanaian Cedi will depreciate to GH¢15.91 against the US dollar by year-end.
IC Securities attributed the revision from their initial projection of GH¢13.2 to the current macroeconomic conditions.
The firm observed that the Bank of Ghana’s modification of the Cash Reserve Requirement (CRR) had minimal effect on decreasing local currency liquidity, as banks shifted their maturing securities into CRR holdings.
IC Securities also mentioned that the settlement of contractor arrears led to an increased supply of Cedis in the forex market, exacerbating the pressure on the currency.
The firm remarked, “Following the unexpected cut in the policy rate by the Bank of Ghana in January 2024, we indicated our deferred inclination to raise our forecast for the US dollar-Ghana cedi FX (foreign exchange) rate as we foresaw strong selling pressure on the local currency. Our decision to delay the revision of our forecast until mid-year was based on expected program-related inflows and the final tranche of the cocoa syndicated loan for the 2023/24 season.”
“While these inflows could trigger a short-term retracement, we anticipate continued hedging by domestic investors as we approach the December elections, which will likely offset any inflow-induced appreciation. Consequently, we have raised our forecast for the end-2024 US$/GHS rate to GH¢15.91/US$1,” the research firm explained.
Presently, the local currency, the Cedi, is trading at GH¢15.60 to the dollar at various forex bureaus.
IC Securities indicated that around $2.3 billion is anticipated to flow into the country in the latter part of 2024.