The Ghana cedi will recoup some losses in the coming days following an improved performance against the US dollar last week.
The local unit gained 0.10% against the American greenback last week to close trading at GH¢15.69. This performance signalled good times ahead.
The Cedi held ground against the dollar as soft US inflation data spurred bets that the Federal Reserve would ease interest rates in September 2024.
This caused the American greenback to dip against a basket of currencies.
Analysts, however, expect the local unit to trade sideways against the American greenback as corporate demand pressures appear to be resurfacing in the market.
Conversely, the local unit depreciated by 0.30% and 0.63% week-on-week against the euro and the pound after data showed the UK economy grew faster- than- expected in May 2024.
This potentially lowered the chances of an August 2024 UK rate cut and caused the pound to strengthen.
Presently, the cedi is going for GH¢15.65 against the US dollar. It has since January 1, 2024, lost 20% to the American greenback.
Cedi to recoup some losses
Meanwhile, Fitch Solutions has indicated that the cedi will recoup 9.0% loss to the dollar, narrowing it yea- to-date loss to about 10%
“We project the cedi to appreciate by 9.0% to CCEPTED GH¢13.5/US dollar by year-end, from the July 9 spot of 14.7/US dollar. On July 8 [2024], Ghana reached an agreement with international bondholders to restructure US$13 billion worth of external debt, a process that should be concluded by the end of September. We believe that this will improve investor sentiment towards Ghana, improve capital inflows and provide appreciatory pressure to the unit”.
“Moreover, the start of a monetary easing cycle in the US in September will likely put some pressure on the dollar and improve investor appetite for higher-yielding emerging market assets, providing tailwinds to the cedi”, it concluded.
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