According to its latest analysis of Ghana’s 2023 Economic Outlook, it said the likely programme from the International Monetary Fund (IMF) signals through investors that the government is committed to fiscal consolidation that will turn around the country’s economic predicament.

Senior Country Risk Analyst at Fitch Solutions, Mark Kruninger said the announcement of the staff-level agreement by the IMF has helped to improve the value of the cedi.

The local currency has for the past one week witnessed over 20 percent gain in value to the US dollar. It is presently selling at 10 cedis 50 pesewas to the dollar.

“As you can see on the left hand side of the slide, we believe that the cedi will start to stabilise soon due to greater clarity on Ghana’s restructuring  programme and the likely IMF programme which again we believe will be reached in early 2023”.

“An IMF deal will signal to investors that the government is committed to fiscal consolidation and turning around the country’s economic predicament which will gradually restore investor sentiments and allow the cedi to stabilize”, he explained.

Mark Kruninger also noted that the decreasing inflation in the USA will prevent the US Federal Reserve from hiking its policy rate.

“We believe that with the inflation in the US decelerating now the US Federal Reserve will refrain from hiking its benchmark policy rate further in 2023 which will allow the dollar to come down from the highs in 2022. So providing some support to the cedi and emerging markets – exchange rates in general.”

He conclude that history suggests that the worst depreciation of the cedi experienced in recent times is over.

“If we are looking into the history of the cedi, we see that the period of significant exchange rate weakness all lasted within 12 months and given that we are currently in month 11, history will suggests that the worse is behind us”.

The local currency has for the past one week witnessed almost 30 percent gain in value to the US dollar.

Similar stories could be said about the cedi’s performance against the pound and the euro.

It is presently selling at ¢10.50 to the dollar, ¢10.50 to the euro and ¢12.50 to the pound.

Rallying cedi gains significantly on IMF staff-level agreement announcement day

The cedi gained significantly to the dollar and the other major foreign currencies on December 13, 2022, following the announcement of the Staff-Level Agreement between the International Monetary Fund (IMF) and the government.

The local currency sold below ¢12 to the dollar in the forex market.

Source: myjoyonline.com