Databank Forecasts Near-Term Cedi Rebound on Expected FX Inflows
Databank Research is projecting a near-term rebound in the cedi, supported by anticipated foreign exchange inflows that could help ease weak sentiment in the market.
The outlook follows a mixed performance by the local currency over the past two weeks, during which the cedi weakened marginally on the interbank market but strengthened in retail trading. Databank attributes this divergence to differing demand conditions across segments of the foreign exchange market.
According to the research firm, the USD/GHS interbank midrate closed at GHS 10.88, up from GHS 10.70 in the previous period, reflecting renewed demand pressures that outpaced available FX supply. In contrast, retail rates improved, with the dollar easing to GHS 11.90 from GHS 12.15, signalling softer demand at forex bureaus.
The cedi also posted gains against other major currencies. On the interbank market, the pound sterling and the euro weakened by 2.70 per cent and 2.57 per cent, closing at GHS 14.78 and GHS 12.80 respectively. Similar movements were recorded in retail trading, suggesting pricing adjustments by forex bureaus aimed at attracting buyers.
Databank noted that while renewed demand weighed on the cedi within the interbank market, subdued retail demand helped support modest gains outside the banking system.
Looking ahead, the research firm maintained a base-case projection of GHS 10.70 to the US dollar, describing the outlook as cautiously optimistic.
Databank identified persistent dollar weakness as a potential tailwind for emerging and frontier market currencies, including the cedi. This, it said, reflects sovereign investors gradually reducing exposure to US Treasury holdings despite attractive yields, alongside expectations of a more dovish policy stance by the US Federal Reserve.
Databank’s analysis suggests that although short-term pressures persist in Ghana’s foreign exchange market, a combination of policy support, expected FX inflows and favourable global currency dynamics could help stabilise the cedi in the weeks ahead.
