Out of 15 top currencies on the African continent tracked by Joy Business, the Ghana cedi is presently placed 7th in terms of league of best performing currencies, despite the recent pressures on the local currency.
It is performing better than the South African rand (-8.07%), the Nigerian naira (-7.37%) and the CFA (-4.39%), and could replicate the record performance last year where it lost only 3.5% in value to the American ‘greenback’.
So far, it has depreciated by about 1.30% to the US dollar, selling at about ¢6.5 to the US dollar on the interbank forex market.
Analysts have, however, calmed market sentiments about the recent persistent depreciation.
This is because the local currency will be bolstered by the $1 billion Special Drawing Rights from the International Monetary Fund and the expected COCOBOD Loan Syndication in September or October 2021.
Importantly, the current pricing of the cedi to the dollar is also within the range of many research institutions’ forecast for the year.
Currency Analyst at Databank Research, Courage Boti, told Joy Business the outlook of the cedi is stronger despite the risk.
“If you look at the future and the inflows that will come to boost our reserves, it looks like the cedi will end the year on a much stable note than we’ve seen in time past. Based on this, I think the outlook is rather more optimistic given the flows that we expect over the period.
“But of course, there is increasing risk in the quantitative easing in the US and other places, which means that sell-offs on the market will continue”, he added.
Cedi forecast to end year within ¢6.14 and ¢6.32 to dollar
Whilst Fitch Solutions is projecting ¢6.32 pesewas to a dollar by the end of the year, Databank Research is predicting ¢6.14 pesewas, about 3 percentage point’s depreciation.
Fitch attributed a rebound of the global economy which will stimulate economic activities, as the rationale behind its end-year cedi to dollar rate of ¢6.32, a little above 4% depreciation.
Databank on the other hand said the recent portfolio-induced pressure tampered with its earlier optimism.
However, it believes the cedi should remain supported by the gross forex reserves of about $10.99 billion.