The seasonality-induced FX liquidity pressure that kept the cedi pinned back since the start of the fourth quarter of 2023 abated last week, with the local unit posting w/w gains vs the three major trading currencies.
The cedi closed trading last week with 0.4%, 2.7% and 0.7% appreciation against the USD, the Euro and the GBP, respectively, at the week’s close.
The local unit also recorded similar performances against the Euro and the GBP on the interbank market but closed the week broadly stable vs the USD.
“We believe the FX liquidity release following the November 2023 monetary policy decision underscores the improving liquidity conditions in the market,” GCB Market Research said.
With the government working towards reaching a Memorandum of Understanding (MOU) with official creditors before 2023 ends, this liquidity release, the imminent cocoa loan and the anticipated release of the second tranche under the IMF programme should cushion the cedi ahead of 2024.
Thus, the local unit could open 2024 with ample liquidity cushion and, together with a continuous disinflation process, the ongoing reforms and the external debt treatment, could sustain the steadily improving market sentiments.
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