Analyst predicts continuous depreciation of cedi in 2014

December 19, 2013 Source: Citifmonline
Analyst predicts continuous depreciation of cedi in 2014

An economic analyst is predicting challenging times for the cedi next year despite Government’s plans to shore its value.

The Cedi has in the past two years seen a significant depreciation in value.

Its 2013 year to date depreciation against the dollar stands at about 11 percent and currently is exchanged at about 2 cedis 9 pesewas on the interbank market.

The Cedi has also depreciated about 12 percent against the British pound and 14 percent against the Euro.

Government has indicated it intends to among others reduce domestic borrowing, a move that could significantly strengthen the cedi.

Head of research at Gold Coast Securities, Samuel Ampah told Citi Business News, if government goes according to its economic plan indicated in the 2014 budget, the cedi could end up at 2 cedis 40 pesewas.

“If government is successful in raising some of its revenue through the bond market, that will come to shore up the value of the cedi a little bit. If government’s fiscal discipline is strengthened in 2014, we might have the cedi relaxing a little bit” he said.

“But however if we get the streak of high expenditure on government side and revenue expectation are also not met in the first and second quarter in 2014, the impact will be felt in the high rate of depreciation of the cedi. So we will expect that the cedi will not cross GHS2.40 by the end of 2014”, he added.