Ghana Cedi In Trouble As Analysts Predict It To Weaken Against Dollar In 2024 Despite IMF Support

• Bloomberg has reported that analysts are predicting struggles for the cedi in 2024 despite the International Monetary Fund's support
• The cedi is currently the third worst-performing currency in Africa after brief stability amid Ghana’s economic crisis
• Courage Boti, an economist at GCB Capital Ltd, noted that Ghana still had weak reserves despite a 10-month high of $5.9 billion

Analysts are predicting more struggles for the cedi in 2024 according to reports from Bloomberg.

The cedi is currently Africa’s third worst-performing currency in 2024 despite the International Monetary Fund’s $3 billion bailout.

Courage Boti, an economist at GCB Capital Ltd, noted that Ghana still had weak reserves despite a 10-month high of $5.9 billion.

Boti also noted that election years also pose a risk to the cedi because of pressure from foreign exchange demand.

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“Moreover, elections this year is a big risk in terms of foreign exchange demand pressure,” he said. The vote for a new president is due to be held in December.

Ghana announced a moratorium on its foreign obligations in December 2022 as it grappled with the aftermath of the Covid-19 pandemic and the shock to prices caused by Russia’s invasion of Ukraine.

It has completed a domestic bond revamp and reached an agreement in principle with bilateral lenders in January to rework $5.4 billion of loans. It is still negotiating with Eurobond holders who are owed $13 billion.

Kweku Arkoh-Koomson, an economist at Databank Group, noted that one of the policy priorities of the central bank under the IMF programme is to rebuild foreign reserves.

The cedi traded almost unchanged at GH¢12.9267 per dollar and has lost 7% of its value so far in 2024.

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It was earlier estimated that the Ghana cedi would lose about 8.4% of its value to the US dollar in the retail market. The cedi lost 15.2% of its value in 2023.

Bloomberg also did not classify the cedi in the ‘Best Spot Returns’ nor ‘Worst Spot Returns’ category in 2023.

Bank of Ghana urges businesses to stop pricing in dollars

Meanwhile, YEN.com.gh reported that the Bank of Ghana warned the business community in Ghana against pricing and doing other related activities in dollars and other foreign currencies.

The central bank said transacting in foreign currency in Ghana without authorisation is against the law.

The BoG said in a statement that it is collaborating with law enforcement agencies to continue the clampdown on businesses flouting the law.

Source: YEN.com.gh