Cedi soars nearly 50% against dollar as confidence rebuilds

The cedi has dropped over 30% so far in 2022.This week, the Ghana cedi began on a positive note, showing a slight increase against the US dollar in the retail market.

It was priced at GH¢10.98 in the retail sector and GH¢10.25 in the interbank market.This year, the cedi has appreciated nearly 50% in value against the American dollar.

Last week, the local currency continued to strengthen, buoyed by consistent foreign inflows and a reduced demand for hard currency.

In the interbank market, the cedi rose by 6.52% week-on-week against the US dollar, solidifying its status as the leading performer among 15 sub-Saharan African currencies.

In the retail market, it increased by 12.3% against the dollar, 9.6% against the pound, and 11.5% against the euro.

Nonetheless, a report from Reuters noted that offshore investors are slowly returning, driven by forex demand as they aim to repatriate profits from their cedi investments.

Databank Research stated, “We believe that a steady demand trend may exert some modest pressure on the GHS [cedi] in the near term.”

However, it anticipates sufficient liquidity in the market this week, along with the Bank of Ghana’s targeted support to help stabilize the cedi.

Fitch Solutions has adjusted its end-of-year forecast for the cedi-to-dollar exchange rate to GH¢13.0, down from its earlier estimate of GH¢15.5 for one US dollar.

The firm also predicts a 12.9% appreciation against the US dollar by 2025.

According to the UK-based company, this forecast is based on the expectation that the cedi will appreciate by 16% between late April 2025 and mid-May 2025, driven by rising gold prices.

“The cedi has appreciated by 16% from late April to mid-May (at the time of writing) due to higher gold prices, prompting our Country Risk team to lower their end-2025 forecast for the Ghanaian cedi to GH¢13.0/US dollar.”