The cedi has experienced a rapid depreciation trend since February 2024, primarily due to continuous corporate forex demand pressures.

Despite this depreciation, key economic indicators in Ghana point towards an improving macroeconomic environment.

The country’s GDP growth is projected to improve slightly from 2.9% in 2023 to 3.3% by the end of 2024, while average inflation is expected to decrease from 38% in 2023 to 18% in 2024.

To support the local currency, the Central Bank sold US$13 million in the spot market earlier this week and also sold $20 million to Bulk Oil Distribution Companies (BDCs) in the 51st auction.

However, the cedi still experienced depreciation against major trading currencies in the first quarter of 2024, albeit at significantly lower rates compared to previous years.

Courage Boti, the lead researcher at GCB Capital, believes that recent developments offer a glimmer of hope for the cedi’s stability in the near term.

He attributes this optimism to the improving macroeconomic environment and the potential for increased forex demand absorption from the Bank of Ghana’s auctions.

“In my engagement with the traders, what they see is a pile-up of demands from the corporate sector, largely the BDCs, who are just about more or less 20% of the IFAX needs from the BDCs auction that the Bank of Ghana conducts every fortnight. So, they source the rest from the open markets and also from the other corporate sectors. You could immediately think about things like the seasonal trends that we know from before; dividends repatriation in the second quarter.”