Fitch reiterates position cedi will record strong performance in 2023

Fitch Solutions has reiterated that the Ghana cedi will record a strong performance against the US dollar in 2023.

According to the UK based firm, this will come on the back of an expected boost in the country’s reserves as a result of $3 billion from the International Monetary Fund support programme and an improvement in the current account position.

The government of Ghana is optimistic of concluding its Debt Exchange Programme by the end of February 2023,

Speaking at a Sub-Saharan Africa Market Update, Senior Country Analyst, Mike Kruninger, said the cedi’s performance in 2023 will be very much different from last year.

“Disbursement of Special Drawing Rights will shore up Ghana’s foreign reserves in 2023 which will improve the Bank of Ghana’s ability to defend currency. Secondly, overall investor sentiments will improve as debt restructuring gets underway…the IMF programme gets exactly board approval and the government makes progress on fiscal consolidation in 2023 and will also provide some relief to the exchange rate”.

“And then the third reason for this is that, we hold a relatively positive view on Ghana’s current account dynamics in 2023”.

Fitch Solutions is predicting a narrow current account deficit of 4.0% of Gross Domestic Product (GDP) for Ghana in 2023, from 4.4% recorded in 2022. This is expected to impact positively on the value of the Ghana cedi.

“So significant production increases in Ghana’s three most important export products that is gold, oil and cocoa that will likely provide some support to the cedi. All of these factors inform our view that the cedi will remain on an upward trajectory, but there will be significantly less depreciatory pressures as compared to 2022”. Mr. Kruninger said.

The local currency in the past two weeks improve in value of more than 5% against the US dollar, narrowing its year-to-date loss.