The Ghana cedi is projected to maintain its recent stability and potentially appreciate against the US dollar as the government nears the completion of its Domestic Debt Exchange Programme (DDEP).
Achieving the DDEP targets is considered the final major hurdle required to unlock a crucial support package from the International Monetary Fund (IMF). Analysts suggest that the successful restructuring of domestic debt will significantly bolster investor confidence and improve the overall outlook for Ghana’s foreign exchange market.
In early February 2023, the cedi showed signs of recovery following a volatile start to the year, gaining approximately 0.78% to trade at roughly ¢12.85 per dollar. To support this momentum and manage corporate demand for forex, the Bank of Ghana intervened by selling $22 million on the spot market.
Furthermore, the government secured critical agreements with the Ghana Association of Banks, the Ghana Insurance Association, and the Ghana Association of Securities Industry, which are essential for restoring macroeconomic stability.
Although the deadline for the DDEP was extended to February 7, 2023, to ensure maximum participation, the consensus among financial experts is that the “Board Level Agreement” with the IMF remains the primary catalyst for long-term currency strength.
By aligning with debt sustainability targets, Ghana aims to reduce its fiscal pressure, which would historically lead to a more predictable and resilient exchange rate for the local currency.