… on account of tourist influx, IMF disbursement, peaceful elections
By Joshua Worlasi AMLANU & Ebenezer Chike Adjei NJOKU
The cedi is expected to maintain its recent stability, buoyed by the anticipated influx of foreign exchange (FX) from expected tourists, coupled with the recent disbursements by the International Monetary Fund (IMF) and the just-concluded peaceful general elections.
The local currency has recorded gains against its major trading partners over the past month, largely on account of interventions by the Bank of Ghana (BoG).
Last week, the local unit closed unchanged across major currencies at a mid-rate of GH¢16.25 to US$1. This comes on the back of the central bank’s calculated market support, which injected US$240.4million to meet market demand.
“The FX market appeared quite balanced last week,” financial analysts at Databank said in a recent note to investors.
The recent IMF board’s approval for the third review of its Extended Credit Facility (ECF) has also been a critical catalyst for market sentiment. The international financial institution approved an immediate disbursement of US$360million, bringing the total programme disbursement to US$1.96billion.
This, analysts believe, will positively impact the market.
“We believe the successful third review would bolster investor confidence and help tame speculative demand for FX,” Databank said.
In addition to these developments, the festive season’s FX liquidity inflow is expected to complement the central bank’s ongoing market interventions.
This comes as Ghana Tourism Authority (GTA) and the oversight ministry – Tourism, Culture and Arts – projected the arrival of approximately two million international tourists in 2024.
This anticipated influx was expected to generate over US$3billion in revenue on account of the ‘Beyond the Return’ initiative. By mid-2024, the tourism authorities announced that some 600,000 international visitors had arrived, with at least 1.3 million tourists to come in the year’s second half.
“We envisage the tranche disbursement, coupled with seasonal FX liquidity as we approach the festive seasons, will augment the central bank’s market intervention and help stabilise the local unit,” Databank predicted.
Adding to the positive economic narrative, the recent peaceful elections have further strengthened market confidence. The resounding victory by President-elect, John Dramani Mahama, and the swift concession by Vice President Dr. Mahamudu Bawumia have driven positive market sentiments.
“We believe this will continue to boost market confidence and help stabilise the cedi.”
Nevertheless, some analysts have expressed concerns over the central bank’s recent actions about the increased intervention on the FX market. Some have questioned the marked absence of reserve figures by the central bank for November 2024 in its last published official data, despite chronicling the appreciation of the cedi during the period.
There are concerns that the profit-taking season of the first quarter of 2025 could heap pressure on the cedi.
