The Ghana Association of Forex Bureaux has sounded the alarm over the persistent depreciation of the Ghanaian cedi, warning that without immediate and effective interventions, the currency’s decline is unlikely to abate.
The cedi has already weakened by 11% against the US dollar since the beginning of the year, positioning it as one of the worst-performing currencies globally. This unsettling trend has raised concerns about its potential adverse effects on business operations in the country.
Dr. Alex Akpabli, Vice President of the Association, has pinpointed the 2024 election spending as a significant factor exacerbating the cedi’s depreciation.
“Looking at the trends, and this year also being an election year, government would have to spend a lot to be retained,” he remarked.
He further stressed the need for fiscal discipline, urging the government to curtail expenditure and bolster investments in local industries to attract foreign currencies.
While Dr. Akpabli’s comments reflect widespread apprehension about the cedi’s stability, Fitch Solutions offers a more optimistic outlook.
The financial research firm projects a marginal strengthening of the cedi by approximately 1% against the US dollar in 2024. Fitch Solutions anticipates an end-year exchange rate of GH¢12.25 to one US dollar, attributing the potential recovery to progress in Ghana’s commercial debt restructuring.
Despite the divergent views, both parties agree on the critical need for the government to implement robust measures to stabilize the currency and restore investor confidence.
Dr. Akpabli cautioned saying, “From my experiences over the years, I don’t see any appreciation going forward unless something dramatically or miraculously happens.”
The forthcoming months will undoubtedly be pivotal for Ghana’s economic landscape, with the government’s response to the cedi’s depreciation under intense scrutiny.
The efficacy of the proposed interventions and the country’s ability to navigate the challenging economic terrain will be crucial in determining the cedi’s future trajectory.