The Ghanaian Cedi, which has experienced a year-to-date depreciation of over 27% against the US dollar, appears to be stabilizing, as market analysts forecast a potential rate cut by the U.S. Federal Reserve.
Such a move could weaken the dollar, providing a much-needed boost for the Cedi’s recovery.
Last week, the Cedi posted notable gains against the dollar and other major foreign currencies after a prolonged depreciation.
The rebound was attributed to increased corporate demand, largely driven by seasonal pressures ahead of the festive season.
Supported by the Bank of Ghana’s auction to Bulk Oil Distribution Companies (BDCs), the Cedi appreciated by 0.46% against the dollar on a week-on-week basis.
It also strengthened by 0.47% against the British pound and 0.56% against the Euro.
Additionally, market confidence was bolstered by the inauguration of Ghana’s first gold refinery, the Royal Ghana Gold Refinery, in August 2024.
With a refining capacity of 400 kilograms of gold per day, sourced from artisanal and small-scale miners nationwide, this development is expected to significantly enhance the country’s foreign exchange earnings.
The Cedi also gained momentum following a reported decline in inflation over recent months. Looking ahead, speculation around a possible 50 or 25 basis point rate cut by the U.S.
Federal Reserve on September 18, 2024, has further fueled expectations of a weaker dollar.
This could offer additional support to the Cedi, reinforcing the currency’s resilience in the coming weeks.
Source: citinewsroom.com