Report predicts the Ghana cedi to fall by 8.6 percent in 2020, here’s why

The decline the report said will be lower than the 12.9% depreciation to the American currency in 2019.

“On account of the anticipated BoG support, partly offset by fiscal risks to the outlook, we obtain our year-end 2020 forecast for USD-GHS interbank rate at GHS6.05 ± GH¢0.10 (FY-2020 Depreciation: 8.60% ± 1.50%)”, investment bank,” the report said.

2020 outlook

The report noted that “We feel assured by the posture of the monetary authorities in maintaining a broadly stable Ghana cedi in 2020. Our optimism is grounded in the Bank of Ghana’s bi-weekly FX forward auctions which would deepen forward trading and limit spot market pressures.”

The BoG published its FX forward auction calendar for 2020, signalling its plan to inject a cumulative size of US$715 million into the forex forward market in 2020.

The report said: “We note a relatively higher forward auction target of $40 million planned for Quarter One (Q1)-2020 compared to $25 million per auction after Q1-2020. We view the higher-sized allotments for Q1- 2020 as reflecting the Bank of Ghana’s commitment to increase forward activities in Q1-2020 when seasonal pressures tend to shock the spot market.”

It also expected the government’s plan for early issuance of a $3 billion Eurobond to bolster the Bank of Ghana’s capacity to execute its Foreign Exchange forward auctions.