The cedi is expected to face downward pressure this week due to high demand for the dollar, with the exchange rate at GH¢12.80 for one dollar.

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The cedi is anticipated to face ongoing challenges this week due to persistent demand pressures for the dollar, resulting in a negative impact on the local currency’s performance. In the previous week, there was a slight depreciation of the cedi, leading to a year-to-date loss of approximately 3.0%.

The heightened demand for the dollar continued to hinder the cedi across major trading currencies, despite the Central Bank injecting $3 million into the market. Unfortunately, this intervention proved insufficient, causing the local currency to weaken by 0.60% against the US dollar, closing the week at GH¢12.80 in the retail market.

While the cedi experienced a 0.16% depreciation against the pound, it managed a 0.19% gain against the euro. These fluctuations in the exchange rates reflect the complex dynamics and challenges faced by the Ghanaian currency in the global market.

A significant development last week involved a meeting of global creditors and rating agencies to discuss the impact of these agencies on debt-distressed nations, including Ghana. The focus was on how rating agencies’ actions have contributed to heightened borrowing costs following successful debt restructuring. Analysts believe that a positive revision to the rating methodology for debt-distressed countries could bolster investor confidence in Ghana, potentially improving the cedi’s outlook in the medium term.

Despite these discussions, the prevailing pressures on the cedi are expected to persist, posing ongoing challenges for the currency. The central bank’s injection of funds was evidently not sufficient to counteract the demand for the dollar, indicating a need for more comprehensive measures to stabilize the currency.

Recent remarks by Dr. Kwakye, highlighting concerns about the Bank of Ghana’s financing of the government and its connection to the peak inflation of 54.1% in 2022, add another layer to the economic landscape. Additionally, the growth of currency outside banks in the final quarter of 2023 and commendations for the central bank’s efforts in economic recovery from figures like Bawumia contribute to the broader context of economic discussions.

Looking forward, there are varied predictions regarding the future of the cedi. Projections suggest that the cedi is expected to depreciate marginally against the dollar in 2024, ending the year at GH¢13.40 to a dollar. However, the actual outcome will depend on various factors, including global economic conditions, government policies, and the effectiveness of interventions by the central bank.

The cedi faces ongoing challenges due to persistent demand pressures for the dollar. While interventions have been made, the current economic landscape, discussions on debt restructuring, and varying projections contribute to the complexity of the situation. The path ahead for the cedi remains uncertain, requiring continuous monitoring and strategic measures to address the evolving dynamics in the global financial markets.

Source: Myjoyonline