The Ghanaian cedi has depreciated by 2.2% against the US dollar since January 2024, despite the approval of the first review of the International Monetary Fund (IMF) program by the Board on January 19, 2023.

Last week, the local currency faced challenges against major trading currencies due to a stronger US dollar, even with foreign exchange liquidity injection.

The US dollar index closed 100 basis points stronger at 103.24 after robust US economic data suggested a cautious approach from the Federal Reserve in cutting policy rates.

Despite the Bank of Ghana's $11.6 million spot market support, the cedi ended the week 1.60% weaker at a mid-rate of GH¢12.53/$ on the retail market. It also experienced a 1.12% and 1.11% week-on-week dip against the pound and the euro, respectively, on the retail market.

Analysts anticipate improved investor sentiment with the expected inflow of the $600 million bailout package and other budgetary support from the World Bank to mitigate the cedi's depreciation. Despite ongoing corporate demand, they believe the forex market sentiment will improve as cash inflow from the IMF and World Bank should enhance supply-side intervention and provide near-term support to the cedi.

As of the current week, the cedi has started strong, trading at GH¢12.43 to one US dollar.

In another development, Ghana successfully negotiated terms with bilateral creditors on January 12, 2024, to restructure a $5.4 billion debt with the Official Creditor Committee. The World Bank confirmed that this debt rework has unlocked a release of $300 million in budget support from the International Development Association (IDA), which will be considered by the executive board this week.