Market analysts at GCB Capital express optimism regarding the cedi's outlook for the rest of the year, foreseeing stabilization by mid-2024.

The cedi has faced a rapid depreciation trend since February 2024, mainly due to sustained demand for foreign exchange by corporations.

Despite this depreciation, key economic indicators in Ghana suggest an improving macroeconomic landscape. GDP growth is projected to increase slightly from 2.9% in 2023 to 3.3% by the end of 2024, while average inflation is anticipated to drop from 38% in 2023 to 18% in 2024.

To bolster the local currency, the Central Bank conducted a spot market sale of US$13 million earlier this week and also sold $20 million to Bulk Oil Distribution Companies (BDCs) in the 51st auction.

Nevertheless, the cedi experienced depreciation against major trading currencies in the first quarter of 2024, albeit at notably lower rates compared to previous years.

Courage Boti, the lead researcher at GCB Capital, finds reasons for hope in recent developments regarding the cedi's stability in the near future.

He attributes this positive outlook to the improving macroeconomic conditions and the potential for increased absorption of forex demand from the Bank of Ghana's auctions.

“In my engagement with the traders, what they see is a pile-up of demands from the corporate sector, largely the BDCs, who are just about more or less 20% of the IFAX needs from the BDCs auction that the Bank of Ghana conducts every fortnight. So, they source the rest from the open markets and also from the other corporate sectors. You could immediately think about things like the seasonal trends that we know from before; dividends repatriation in the second quarter.”