Fitch Solutions predicts that the Ghana cedi will regain some value against the dollar in the upcoming months.The London-based firm attributes this improvement to enhanced investor sentiment, increased dollar inflows, and more favorable external conditions.

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In its article titled "Sub-Saharan Africa Currency Round-Up: Greater Stability Ahead in the Second Half of 2024," Fitch Solutions noted that external conditions are expected to provide additional support to Sub-Saharan African currencies in the coming quarters.“We expect the Ghanaian cedi to fare better in H2 [second-half of 2024]. In the year to date, the cedi has lost 19.

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2% of its value against the US dollar, positioning it among the worst performing currencies globally. Subdued market sentiment amid debt restructuring negotiations has kept capital inflows weak, while the start of an economic recovery - real GDP growth accelerated from 3.8% in Q4 [quarter 4] 2023 to 4.7% year-on-year in quarter 1 2024 - has increased demand for foreign exchange.”<img

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alt="" />“Furthermore, Ghana’s international reserves have remained low, covering just 2.5 months of imports in March. Combined with IMF&nbsp; [International Monetary Fund] agreements to allow the exchange rate to adjust to market conditions, this has led to limited foreign exchange intervention by the Bank of Ghana in the year-to-date”, it added.Cedi to regain 9%

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lossFitch Solutions forecasts a 9.0% increase in the cedi's value by the end of the year from its July 9, 2024 position.On July 8, Ghana finalized an agreement with international bondholders to restructure $13 billion of external debt, with completion expected by September 2024.Fitch Solutions suggests that this restructuring will boost investor sentiment towards Ghana, enhance capital inflows, and create upward pressure on the cedi.

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Additionally, the anticipated start of a monetary easing cycle in the US in September is likely to weaken the dollar and increase investor interest in higher-yielding emerging market assets, benefiting the cedi.Currently, the cedi is trading at GH15.75 per dollar at forex bureaus, having depreciated by about 20% against the US dollar.

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