Fitch forecasts slower depreciation of cedi next year

Fitch Solutions has predicted a slower depreciation of the local currency in 2021, putting the expected loss of value against the U.S. dollar next year at about 3.1%.

“We expect the cedi to lose just 3.1% of its value against the dollar over the year on average. Ghana’s exports are expected to recover strongly in 2021 on the back of higher international oil prices, recovering cocoa exports and continued strength in gold shipments. However, imports will also rebound due to rising household consumption and business investment,” the international research firm explained in its latest analysis.

A comment attributed to the Senior Research Analyst at Databank, Courage Martey, indicates that the cedi will end the year strongly against the dollar despite the uncertainties of the election.

“The cedi performance is still generally strong and I would say very impressive year-to-date. It’s done just about 3.1 per cent against the US dollar; this compares favourably with last year same period when we lost over 9.0%. So, I would say that so far it’s still doing quite good within the uncertainty around, it’s still being impressive. The cedi will remain considerably stable until year-end despite the uncertainty of the domestic and external election,” Joy Business quotes Mr Martey in a report on Tuesday, November 24, 2020.

The cedi’s strong performance has been partly attributed to the Bank of Ghana’s bi-weekly Foreign Forward Auctions and Spot Market interventions which is supported by healthy secondary reserves, equivalent to about 4.3 months of imports.

Currently, 1 U.S. dollar is equivalent to 5.82930 Ghana cedis.