Cedi to sustain gains in quarter 2 amid improving market confidence – Databank

 The Ghana cedi will sustain gains in quarter two amid robust foreign exchange support and im­proving market confidence.

According to Databank Re­search, its forecast was under­pinned by Bank of Ghana’s con­tinuous market support, volatile US dollar, and expected inflows from the International Monetary Fund (IMF).

It pointed out that the central bank’s active engagement in the forex market through targeted in­terventions would remain central to anchoring expectations and ensuring adequate liquidity.

This according to the research would help moderate volatility, smoothen out imbalances, and reinforce confidence in the cedi.

“Similarly, rising concerns over the US economy outlook, compounded by renewed trade tensions and fiscal policy uncer­tainty, have begun to weigh on investor appetite for dollar-de­nominated assets. This shift is expected to create favourable tailwinds for Sub-Saharan African currencies (SSA), including the cedi, as relative demand improves and external pressures ease,” it said.

It further said enhanced macroeconomic stability and increasing investor confidence in Ghana’s policy direction have helped limit speculative position­ing against the cedi.

With lower capital slippage and market panic, it explained that the environment would become more conducive to sus­taining Cedi’s resilience.

Similarly, it stressed that the recent staff-level agreement on the fourth review of Ghana’s US$3.0 billion Extended Credit Facility (ECF) reflects continued progress in fiscal and structural reforms.

Upon expected IMF Board approval, Ghana will secure a US$370mn tranche disbursement.

“We expect this inflow to augment our existing FX [foreign exchange] buffers and help sup­ply-side intervention, cushioning the GH¢ from any potential external shocks”, Databank Re­search added.

The Ghana cedi has in the past six weeks recorded an ag­gressive appreciation against the US dollar and the other major foreign currencies.

It is presently going for about GH¢12.90 to one US dollar in the retail market.

 BY TIMES REPORTER

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