Cedi poised for resilience as EIU forecasts single-digit depreciation in 2024

In the forthcoming year, the cedi stands poised to exhibit noteworthy resilience against the US dollar, projecting a single-digit depreciation, as revealed by The Economist Intelligence Unit (EIU) in its 2024 Africa Outlook Report.

Citing the pivotal role of the International Monetary Fund (IMF) Programme, the UK-based firm forecasts that Ghana’s currency will benefit, setting it apart from the trajectory anticipated for only five other African nations—namely Egypt, Sudan, Ethiopia, Angola, and Zimbabwe—expected to undergo double-digit depreciation in 2024.

“The Central and West African countries that make up the CFA franc zone will experience currency appreciation in 2024. The currencies of most other African countries will depreciate next year, with five experiencing double-digit depreciation: Egypt, Sudan, Ethiopia, Angola, and Zimbabwe,” states the EIU.

Despite an overall projection of currency depreciation against the US dollar across much of Africa, the report offers a glimmer of optimism, anticipating a moderation in the extent of adjustments compared to the preceding year.

However, the domestic scenario paints a contrasting picture, with the cedi currently trading at GHS 12.18 in the retail market. Heightened demand driven by corporates and importers in the lead-up to the festive season continues to exert pressure.

Looking ahead, market dynamics hinge on the impending Cocoa Syndication Loan, eagerly anticipated following parliamentary approval. Investment firm, GCB Capital underscores the critical role of the loan’s timing and the release of the second tranche of the IMF funds in ensuring cedi stability for the remainder of the year.

As the curtains draw on the final quarter of 2023, industry analysts and market observers closely monitor the confluence of the cocoa syndication loan and the IMF bailout package’s second tranche, foreseeing a pivotal influence on the cedi’s performance in the immediate future.