The Cedi experienced a challenging year in 2023, with its value against the US dollar reflecting a year-to-date depreciation of 15.57% in the retail market and a more pronounced 27.81% in the interbank market.
Despite these figures, Bloomberg’s assessments did not slot the cedi into either the ‘Best Spot Returns’ or ‘Worst Spot Returns’ categories.
As the year drew to a close, Bloomberg priced the cedi at ¢11.95 pesewas against the American dollar on December 29, 2023. However, forex bureaus in Ghana quoted a slightly higher rate, selling the cedi at ¢12.18 per US dollar. In contrast, the Bank of Ghana provided a more favourable rate of ¢11.64 to the dollar.
The Cedi’s performance in 2023 can be contextualized by its recovery from the drastic 50% depreciation it suffered against the dollar in 2022. Much credit for this stabilization is attributed to Ghana’s 3-year International Monetary Fund program.
The Fund programme played a pivotal role in mitigating the sharp currency devaluation, subsequently reducing portfolio outflows and lowering amortization payments. A testament to this stabilization is the current account’s notable shift from a deficit of $1.8 billion in 2022 to a surplus of $1.0 billion in 2023.
The Bank of Ghana has indicated that these positive developments across various financial accounts have affected the country’s balance of payments. Additionally, the arrival of the first tranche of the Cocoa Syndicated Loan further alleviated the demand pressure on the US dollar, fostering market expectations of strengthened cedi performance in upcoming periods.
Shifting the focus to the broader African currency landscape, Bloomberg’s rankings crowned the Guinea franc as Africa’s top-performing currency in 2023. Registering a modest gain of 0.64% against the dominant US dollar, the Guinea franc outshone peers like the Djiboutian franc, Mauritian rupee, and Mozambique new metical, which secured the subsequent ranks.
Conversely, the Nigerian naira, Angola kwanza, and Malawi kwacha faced significant challenges, marking them as the continent’s worst-performing currencies with depreciation of 49.5%, 39.14%, and 38.96%, respectively.