•Economist, Courage Martey, said even though this will have an impact on the economy it is not expected to go overboard
•Also, the cedi experienced a 0.04% depreciation against the US dollar in the first half of 2021
Courage Martey, a senior economic analyst of Data Bank Research, has stated that the cedi is expected to slightly depreciate due to the huge demand for forex and the size of external debt service, which he said the government needs to address.
He said the cedi is likely to face huge pressure in the second half of the year because non-residents are likely to take away profits that could be used for re-investment.
Speaking in an interview with Accra-based JoyNews closely monitored by GhanaWeb, he explained that even though the depreciation will affect the economy, it is not expected to go overboard because the country’s reserves are strong enough to accommodate the pressure.
“We expect the slight depreciation to continue largely because of the continuing demand for forex which we expect to see and also because if you look at the size of external debt service that the government has to do, that will also exert some pressure on the reserves position and that could potentially expose the cedis to some depreciation pressure…Also, the risk of profit-taking from non-residence in this context given how high bond prices have gone, you might start to see some foreign investors looking to take profit and that could also exert some depreciation pressure during the second half of this year.”
The Ghana cedi will experience some marginal pressure against the US dollar going into the second half of this year but will end the year better than the record 3.9% achieved last year.
The cedi experienced a 0.04% depreciation against the US currency in the first half but has come under pressure lately.
Mr Martey, however, noted “…But we do not expect this depreciation pressure to go overboard because we believe that the reserves position is still strong enough to accommodate this pressure or demand for forex.”
Despite the expected interest payments on borrowed foreign funds and profit-taking by non-resident investors, expected COCOBOD syndicated loans and other foreign in follows will preserve the relative stability of the local currency.
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The cedi is expected to depreciate due to certain pressures