The Ghana cedi is projected to close the year around GH¢17.70 to one US dollar in 2025, with a deviation of ± GHp20, Databank Research has revealed.
Its expectation is supported by the likely strengthen of gold reserves and the upgrade of the Ghanaian economy which is expected to boost market sentiments.
“We expect a successful 2024 elections to bring renewed confidence in the Ghanaian economy which should lead to increased foreign direct investments and portfolio inflows. This development would bolster investment sentiments around the GH¢ [Ghana cedi] and reduce speculative attacks on the unit,” it pointed out.
The report also said in the aftermath of the elections, the new government might focus on enhancing domestic mining companies to boost gold production.
This comes when gold reserves have been steadily increasing in recent years, currently standing at 37.52 metric tonnes as of the second quarter of 2024, with projections indicating a rise above the levels recorded in 2023.
“We believe the move will further augment gold reserves and offer a potential cushion for the GH¢ [Ghana cedi],” the research firm said.
Following the successful Eurobond debt rework in the third quarter of 2024, global rating agencies, Moody’s and Fitch, upgraded Ghana’s long-term local and foreign currency issuer ratings. Moody’s upgraded the issuer rating from “Caa3” to “Caa2” and “Ca”, respectively, and assigned a positive outlook.
Fitch Solutions followed with the upgrades, assigning a “CCC+” to Ghana’s new USD bonds from the initial “CCC”.
Databank Research further stated that, “We expect a further upgrade as the rating agencies cited that continuous improvement in economic indicators would attract higher upgrades. We expect these developments to improve sentiments around the GH¢ [Ghana cedi] and allow for its stability.”
The local currency ended 2024 with a depreciation of about 21.3 per cent. It traded on December 31, 2024 at GH¢15.75.
