Economist Intelligence Unit (EIU) is predicting a 30% depreciation of the cedi to the dollar in 2023.
This is however lower than the about 44% depreciation of the local currency in 2022.
Disclosing this in its 2023 Country Report on Ghana, the UK based firm said it expects the cedi to depreciate significantly this year.
“We now expect the currency to weaken to ¢12.46:US$1 at end 2023 (from ¢10.95:US$1 as at mid-April).”
It further said that the cedi depreciation will be driven by increased demand for hard currency due to high import prices, inflation, capital flight, rising profit repatriation by Ghanaian-based multinationals and weak investor sentiment in the face of the ongoing debt crisis.
However, the expected Executive Board approval of an International Monetary Fund programme by mid-2023 and sustained fiscal and monetary tightening will help to slow the cedi’s fall comparatively over the second half of the year.
It added “we expect further gradual depreciation in 2024-2027, to ¢14.70: US$1 at end 2027, but at a much slower pace than in 2022-2023 as debt-restructuring uncertainties abate. Ghana’s sustained depreciation reflects the country’s structural current-account deficit and higher inflation than its trading partners”.
It concluded that reserves will average 3.3 months of import cover over 2023-2027, just above the internationally regarded prudential minimum of three months.
The cedi begun trading May 2, 2023 at ¢12.10 pesewas to the dollar on the forex or retail market.
It is also selling at ¢14.98 to the pound and ¢3.00 to the euro.