The conditions that triggered the persistent depreciation of the cedi during the latter part of last year is expected to  persist till the end of the first half of 2022, Databank Research has projected.

The local currency has already depreciated by almost 2%, with only a month and 10 days into the year.

The cedi, according to Databank Research, remains vulnerable to foreign portfolio outflows amidst the elevated import demand.

The heightened uncertainty around Ghana's fiscal outlook worsened the local currency’s woes in the latter part of 2021.

“We expect these conditions to persist in first-half of 2022 in addition to corporate import demand as Ghana's economy rebounds”, it said.

Again, the low prospect of an early-2022 Treasury issuance on the international capital market also exposes the cedi to depreciation pressure in the first half of this year.

The country may not go to the international capital market this year because of the expected high interest it will pay on the bond, due to the downgrade of its credit rating  by Moody’s and Fitch.

“However, we are broadly confident that the BoG's spot and forward forex sales, together with a tighter GHS liquidity, would help limit the depreciation pressure in 2022”, it explained.

Cedi to end 2022 at ¢7.03 to a dollar

The Ghana cedi had been projected to end 2022 at ¢7.03 to the US dollar, the Center for Economics, Finance and Inequality Studies projected.

According to the Center, its forecast of the end-year depreciation of the cedi to the dollar is 99% accurate.

This means that the cost of operations of businesses, particularly manufacturing, will go up. This will consequently trigger increases in prices of some goods on the market, and for that matter inflation.

The Centre therefore wants the Bank of Ghana to supply enough forex to meet the demand of the dollar as it appears the current forex auction strategy is not meeting the market demand for forex.