The Ghana cedi will sustain gains in quarter two amid robust foreign exchange support and improving market confidence.

According to Databank Research, its forecast is underpinned by Bank of Ghana’s continuous market support, volatile US dollar, and expected inflows from the International Monetary Fund (IMF).

It pointed out that the central bank's active engagement in the forex market through targeted interventions will remain central to anchoring expectations and ensuring adequate liquidity. This will help moderate volatility, smoothen out imbalances, and reinforce confidence in the cedi.

Similarly, rising concerns over the US economy outlook, compounded by renewed trade tensions and fiscal policy uncertainty, have begun to weigh on investor appetite for dollar-denominated assets. This shift is expected to create favourable tailwinds for Sub-Saharan African currencies (SSA), including the cedi, as relative demand improves and external pressures ease.

Improving Market Sentiments to Reduce Speculative Attacks on Cedi

It further said enhanced macroeconomic stability and increasing investor confidence in Ghana's policy direction have helped limit speculative positioning against the cedi.

With lower capital slippage and market panic, it explained that the environment will become more conducive to sustaining Cedi's resilience.

IMF Support to Augment FX Buffers

Similarly, it stressed that the recent staff-level agreement on the fourth review of Ghana's US$3.0 billion Extended Credit Facility (ECF) reflects continued progress in fiscal and structural reforms.

Upon expected IMF Board approval, Ghana will secure a US$370mn tranche disbursement.

“We expect this inflow to augment our existing FX [foreign exchange] buffers and help supply-side intervention, cushioning the GHS from any potential external shocks”, Databank Research added.

The Ghana cedi has in the past six weeks recorded an aggressive appreciation against the US dollar and the other major foreign currencies.

It is presently going for about GH¢12.90 to one US dollar in the retail market.