Currency Analyst says Cedi may not depreciate by more than 5% in 2022

By InstinctBusiness Jan 21, 2022 0

Currency Analyst, Courage Martey has pointed out that the Ghana cedi may not depreciate by more than 5% in 2022 to the US dollar.

The local currency lost a little over 9% to the dollar on the retail market and about 4% to the American currency on the interbank market, in 2021.

The Center for Economics, Finance and Inequality Studies is also projecting a little above ¢7 end-year depreciation of the cedi to the dollar.

But Mr. Martey who is a Senior Economic Analyst at Databank Research said the Bank of Ghana will show commitment to price stability this year as expected in the $450 million Forex Forward Auction in the first quarter of 2022.

“We trust the Central Bank to remain committed to price stability in the goods market and the foreign exchange market; and they have already signalled that in the calendar they released”.

“We are also mindful of the risk to the currency especially given what we are expecting to happen in the advance market. Foreign investor movement and development in the advance market could also prove special to the currency [cedi].

“In that regard, we think there will still be some form of depreciation. We think the depreciation we will see for 2022 should still be a single digit of depreciation, probably below 5%.

Cedi to end 2022 at ¢7.03 to a dollar

The Center for Economics, Finance and Inequality Studies have stated that the Ghana cedi is expected to end 2022 at ¢7.03 to the US dollar.

According to the Center, its forecast of the end-year depreciation of the cedi to the dollar is 99% accurate.

It therefore wants the Bank of Ghana to supply enough forex to meet the demand of the dollar as it appears the current forex auction strategy is not meeting the market demand for forex.

“This view of inadequate supply of forex is gleaned from the wide disparity that exist between Bank of Ghana’s forex quote and the interbank quotes. The similar disparities in quotes among banks at the retail level also indicates the inadequate supply of forex on the market”, it pointed out.