Ghana: Cedi will continue depreciation into first quarter of 2023

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Fitch Solutions has projected that Ghana’s cedi will continue to depreciate until the first quarter of 2023.

According to the international research firm, inferring from previous studies of the Ghana cedi, it is likely that the cedi will continue depreciating till an IMF programme is secured.

In its latest article on Ghana published on November 14, Fitch said: “Our view is further informed by the fact that previous periods of significant exchange rate weakness in Ghana all lasted roughly 12-14 months suggesting that the cedi will continue to depreciate into the Q123 (the current sell-off started in January 2022). This keeps inflation high, weighing on living standards and eroding support for the government.”

Fitch also projected an increase in strikes and protests due to the increasing cost of living in the country.

“While we expect to see an uptick in protests against austerity measures that would likely be implemented under an IMF programme, we do not believe they will threaten the overall stability of the government. This is factored into our Short-Term Political Risk Index, in which Ghana scores 62.0 out of 100 (a higher score implies lower risk), above the Sub-Saharan African average of 50.3,” Fitch added.

Fitch Solutions also projected that in the possible event of the removal of the Finance Minister, Ken Ofori-Atta, ongoing negotiations with the International Monetary Fund will not be affected.

According to Fitch, this is because the next person tipped to be Ofori-Atta’s replacement is Mark Assibey-Yeboah who it believes “would take a more accommodative approach towards negotiations with the Fund.”

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