Research firm, IC Securities has revised its end-2024 US dollar to Ghana cedi rate to GH¢15.91/US$, from its initial forecast of GH¢13.2/US$.

This, it said, is based on the current macroeconomic environment.

“Following the unexpected cut in the policy rate [by the Bank of Ghana] in January 2024, we indicated our deferred inclination to raise our forecast for the US dollar Ghana cedi FX [foreign exchange] rate as we foresaw strong selling pressure on the local currency. Our decision to delay the revision to our forecast until mid-year was anchored on expected programme-related inflows and the final tranche of the cocoa syndicated loan for the 23/24 season.”

“However, these inflows did not fully materialise while GHS [Ghana cedi] supply overwhelmed the market. The subsequent adjustment to banks’ CRR [Cash Reserve Requirement] exerted a limited squeeze on local currency liquidity as banks mostly converted their maturing BoG securities into the CRR positions. Additionally, the seeming fiscal expansion via the clearance of contractor arrears continued to propagate GHS [cedi] liquidity in the forex market with a resultant pressure on the local currency”, IC Securities explained.

It added that the expected inflow of approximately $2.3 billion in the remainder of 2024 appears largely attainable as the indicative timelines add some credibility to its expectations.

It continued that the cedi would benefit more from the signalling effect of the World Bank inflows and less from actual foreign exchange sales as the Bank of Ghana continues to implement constrained interventions amidst reserve build-up.

“While these inflows could trigger a short-term retracement, we foresee continued hedging by domestic investors as we approach the December elections, which will potentially offset any inflows-induced appreciation. Consequently, we raise our forecast for the end-2024 US$/GHS rate to GH¢15.91/US$.

Presently, the local currency is going for about GH¢15.00 to the dollar at the forex bureaus.