Research firm, IC Securities has updated its end-2024 US dollar to Ghana cedi forecast to GH¢15.91/US$, from the earlier prediction of GH¢13.2/US$.

This revision, according to the firm, is due to the current macroeconomic conditions.

“Following the unexpected cut in the policy rate [by the Bank of Ghana] in January 2024, we indicated our deferred inclination to raise our forecast for the US dollar Ghana cedi FX [foreign exchange] rate as we foresaw strong selling pressure on the local currency. Our decision to delay the revision to our forecast until mid-year was anchored on expected programme-related inflows and the final tranche of the cocoa syndicated loan for the 23/24 season.”

“However, these inflows did not fully materialise while GHS [Ghana cedi] supply overwhelmed the market. The subsequent adjustment to banks’ CRR [Cash Reserve Requirement] exerted a limited squeeze on local currency liquidity as banks mostly converted their maturing BoG securities into the CRR positions. Additionally, the seeming fiscal expansion via the clearance of contractor arrears continued to propagate GHS [cedi] liquidity in the forex market with a resultant pressure on the local currency”, IC Securities explained.

It also noted that the anticipated inflow of around $2.3 billion for the rest of 2024 seems quite achievable, given that the projected timelines lend credibility to its expectations.

Additionally, it mentioned that the cedi is likely to benefit more from the signaling effect of the World Bank inflows than from actual foreign exchange sales, as the Bank of Ghana continues with limited interventions while building up reserves.

“While these inflows could trigger a short-term retracement, we foresee continued hedging by domestic investors as we approach the December elections, which will potentially offset any inflows-induced appreciation. Consequently, we raise our forecast for the end-2024 US$/GHS rate to GH¢15.91/US$.

Presently, the local currency is going for about GH¢15.00 to the dollar at the forex bureaus.