The woes of the Ghana cedi may be far from over as market watchers predict it could reach between 15 and 16 Ghana Cedi to the dollar by the end of the year.
The forecast comes in the wake of persistent volatility of the local currency, causing concern among Ghanaians.
Bloomberg, a prominent financial and media company, has predicted that the value of the Ghana cedi will depreciate further by the end of the year 2024.
The prediction falls in line with Bloomberg’s forecast that the cedi is expected to reach a value of GH15.98 against the dollar.
A visit to some forex bureaus on Wednesday, May 15 shows that the dollar is trading between GH¢14.90 and GH¢15.00 on the forex market.
This represents a momentous increase from the GH¢10.97 exchange rate recorded during the same period in May 2023.
The situation has pushed some market watchers like the Acting Chief Executive Officer at Dalex Finance, Joe Jackson, to predict more doom for the local currency, projecting a 15 and 16 Ghana Cedi range by the end of the year.
“It could become a lot worse if the signalling from the government and Central Bank is not right, if it is right we could hang out around the 15 and 16 Ghana Cedi range,” he said.
For Joe Jackson, the free-fall of the cedi has to do with a multiplicity of factors which include: “a rise in inflation, high interest rates, high unemployment, high taxes and low growth.”
He also explains that though the Ghana Cedi has since immemorial been losing its value against other major trading currencies, the situation has worsened because the country is in the middle of an economic crisis.
‘Since 2022, the cedi has been falling because we are in the middle of an economic crisis and this is the context,’ he noted.
A look at the performance of the local currency this year shows that it has been marginally stable till its current performance. It started the year selling at Ghc12.10 to a dollar. As of March 2024, the Ghana cedi lost 8.63% in value to the dollar.
Research Lead with GCB Capital, Courage Boti speaking on the growth trajectory of the cedi from the beginning of the year till date said, “From the start of the year through January, it was relatively stable. We ended January with it moving from 12.10 to 12.45, representing 2.8 per cent depreciation year to date. Typically, quarter one is characterised by seasonality pressures where people are now settling their letters of credit from the import for the festivities generating some FX pressures, among others,” he said.
“For the second month of the year, the cedi ended around GH12.70 from 12.45 representing 4.72 per cent depreciation but towards the end of February, there was some speculation, and the Bank of Ghana settling some oil import bills and corporate demand was picking up. These may have been playing a role in what we are experiencing now.
“Also, in mid-March, we saw a sharp movement from 12 to 13. Then there was relative stability post March until early April where there was another surge into the 14 range translating into about 17.2 per cent depreciation year to date,” he added.
