The cedi is anticipated to maintain its stability against the US dollar and other major foreign currencies in the upcoming week, notwithstanding potential pressures stemming from improved US labour data.
Foreign exchange (FX) flows are projected to see a boost, buoyed by selling activities within the service sector and the interbank sphere. This influx is poised to mitigate the year-to-date loss against the US dollar on the retail market, currently standing at approximately 11%.
In recent market developments, Fitch Ratings upheld Ghana’s Long-Term Foreign Currency and Long-Term Local-Currency Issuer Default Ratings at ‘RD’, following the downgrade in February 2023. Notably, investors displayed limited reaction to this affirmation, as the downgrade had already been factored into their expectations.
The local currency, however, concluded the previous week on a firmer note. Displaying resilience, it experienced a 0.3% week-on-week strengthening against the US dollar. Furthermore, it demonstrated noteworthy gains of 2.36% and 1.39% vis-à-vis the British pound and the euro, respectively.
Currently, the cedi is trading at GHS 11.50 against the dollar in the retail market. Its valuations against the pound and the euro stood at GHS 14.68 and GHS 12.60, respectively.
The cedi has relished a period of reassuring stability since the onset of the second quarter in 2023. This newfound steadiness can be attributed to several factors, including a more stringent monetary policy, the initiation of the International Monetary program, an expanding trade surplus, and the ongoing suspension of external debt service.
Recent weeks have witnessed a synergy of demand management measures with an upswing in domestic FX supply, primarily sourced from energy and services sector enterprises. This blend of factors has collectively contributed to the prevailing stability of the cedi.