By Newstive Media

The Ghanaian cedi, Ghana’s local currency, has been under scrutiny due to its recent decline in value against major trading currencies, particularly the US dollar. As of Tuesday, July 15, 2024, at 8:00 AM, checks by GhanaWeb Business revealed that the cedi is now selling at GH¢15.70 to $1 at some forex bureaus. This depreciation trend is also evident when compared to other trading currencies such as the British Pound and Euro. For instance:

• The cedi is trading at GH¢20.13 to £1.
• It is selling at GH¢16.91 for €1 at major forex bureaus across the country.

Factors Contributing to the Cedi’s Decline

1. Increased Demand for US Dollars: The cedi’s record-low performance has been attributed to heightened demand for the US dollar. This demand arises from various sectors, including purchases of petroleum products, pharmaceuticals, and other imported goods.

2. Debt Restructuring Negotiations: During debt restructuring negotiations, market sentiment remained subdued. Investors closely monitored these developments, affecting the cedi’s stability.

Fitch Solutions’ Perspective

International news portal Bloomberg recently ranked the Ghana cedi as the fourth-worst performing currency among 150 top currencies tracked globally. This verdict places the cedi alongside other struggling currencies like the Egyptian Pound, Nigerian Naira, and the Lebanese Pound.

Optimism Amid Challenges

Despite these challenges, there are reasons for cautious optimism:

1. Investor Confidence: As Ghana reaches an agreement with international bondholders to restructure $13 billion of external debt, investor sentiment is expected to improve. This could positively impact the cedi’s performance.

2. Economic Rebound: Ghana’s real GDP growth has accelerated, rising from 3.8% in Q4 2023 to 4.7% year-on-year in Q1 2024. A stronger economy may alleviate some pressure on the cedi.

3. External Conditions: Fitch Solutions anticipates more favorable external conditions for Sub-Saharan African currencies in the second half of 2024, which could provide additional support to the cedi.

4. Monetary Easing in the US: The potential start of a monetary easing cycle in the United States may weaken the dollar. Investors seeking higher-yielding assets could turn to emerging markets like Ghana, benefiting the cedi.

Conclusion

While the cedi faces challenges, the path ahead remains uncertain. Monitoring economic developments, investor sentiment, and external factors will be crucial. As Ghana continues its economic recovery, we hope for a stronger cedi in the coming months.

The cedi’s value remains a topic of concern, but understanding the underlying factors can help us navigate these fluctuations.