The Cedi is expected to register relative stability against the US dollar – Economist

Archive photo of Ghana cedis banknotes

• The cedi is expected to remain stable in the fourth quarter of 2021

• The cedi closed the third quarter of 2021 with a depreciation of 1.81% against the US dollar.

• Some economists have projected a strong cedi for the rest of 2021

Ghana’s local currency is expected to register relative stability against the main trading currency, the US dollar, in the fourth quarter of 2021, an economist has revealed.

Despite expectations for the local currency, which are expected to come under pressure during the Christmas holiday season, the cedi is expected to remain stable for the period for a number of reasons.

Senior economic analyst at Databank, Courage Martey, when interacting with Joy Business, explained that the stability will be the result of the $ 1.5 billion cocoa syndication loan, of which $ 750 million is expected to hit the account of the Bank of Ghana during this week.

“As we head into the last quarter of 2021, we are fully assured of continued relative stability but with depreciation that will occur at a controlled or modest pace as we already have a strong reserve buffer above five months of import coverage. And from October [2021], we should start to see the disbursement of the tranche of the $ 1.5 billion syndicated cocoa facility that will strengthen the cedi to see the remainder of this year. So in general we are very positive about the cedi, ”explained Martey.

Martey was, however, cautious that the inflows of the cocoa syndicated loan may not fully translate into an appreciation of the cedi in the fourth quarter of 2021.

“We do not expect these entries [cocoa syndicated loan] will result in appreciation in the fourth quarter of this year. However, we believe this will likely mitigate any potential shock to the currency, ”the senior economist stressed.

Meanwhile, the cedi according to central bank data ended the third quarter of this year with a modest depreciation of 1.81% against the dollar.

This figure was, however, lower than the 2.96% depreciation previously recorded during the same period in 2020.

The depreciation of the cedi in the third quarter would be the weakest performance of the local currency in about 20 years.

Some market analysts and economists have predicted that the cedi is well anchored to withstand some anticipated shocks.