Cedi to depreciate against US dollar by 30% in 2023 – EIU

The woes of the Ghana cedi are expected to continue as the Economist Intelligence Unit (EIU) is predicting a 30 percent depreciation of the local currency against the US Dollar in 2023.

The projection is however lower than the 44 percent depreciation of the Cedi against the US Dollar in 2022.

In its 2023 Country Report on Ghana, the UK-based firm said the local currency is expected to depreciate significantly in 2023.

“We now expect the currency to weaken to ¢12.46:US$1 at end 2023 (from ¢10.95:US$1 as at mid¬-April).”

The EIU explained that the cedi’s depreciation will primarily be driven by increased demand for hard currency due to rising inflation, repatriation of foreign-based currency by Ghanaian-based multinationals, high import prices and weak investor concerns.

Meanwhile, the EIU said Ghana’s quest to secure an Executive Board approval from the IMF will ease the cedi’s depreciation in the second half of 2023.

“We expect further gradual depreciation in 2024¬-2027, to GH¢14.70: US$1 at end 2027, but at a much slower pace than in 2022¬-2023 as debt-restructuring uncertainties abate. Ghana’s sustained depreciation reflects the country’s structural current-account deficit and higher inflation than its trading partners”.

Touching on Ghana’s international net reserves, the UK-based said the country will average 3.3 months of import cover over 2023-2027, which represents the globally regarded prudential minimum of three months.

As of May 2, 2023, the cedi is selling at GH¢12.10 pesewas to the dollar on the forex or retail market while the British Pound is selling at GH¢15.20 and the Euro going at GH¢13.40.

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