Fitch revises end-year cedi projection to GH₵13 per dollar

Fitch Solutions has updated its end-2025 forecast for the Ghanaian cedi. The new estimate is GHS13.0/USD, down from GHS15.5/USD. This change follows a significant appreciation of the cedi in recent weeks.

The local currency strengthened by 30% between late April and May 2025. This improvement was mainly driven by higher global gold prices. Fitch now expects the cedi to appreciate by 12.9% in 2025, compared to GHS14.7/USD at the end of 2024.

A stronger exchange rate will help reduce inflationary pressures. It will also allow the Bank of Ghana (BoG) to consider monetary easing later this year. Ghana imports many consumer items like fuel, cereals, and pharmaceuticals.

A stronger cedi is expected to lower prices on imported goods significantly. Although the BoG raised its policy rate by 100 basis points in March 2025, Fitch predicts a reversal soon. They forecast a total rate cut of 200 basis points in the second half of 2025.

This would bring the policy rate down to 26.00% by year-end. On inflation, Fitch notes that it is starting to moderate after a tough start this year. In April 2025, year-on-year inflation was recorded at 21.5%, down from January's 23.5%.

Fitch projects an average inflation rate of 18.0% for all of 2025, ending at 13.1%. This brings inflation closer to the pre-pandemic average of 12.4% from 2015 to 2019.

The expected slowdown in inflation and cedi appreciation may boost household spending power later this year. Dr. Johnson Asiama, Governor of the Bank of Ghana, rejected claims about targeting specific levels for cedi appreciation.

He stated that their strategy focuses on reducing volatility rather than fixing rates at certain thresholds. After a recent Monetary Policy Committee meeting, he clarified that market conditions guide their actions.

Analysts predict that the cedi may stabilize between GHS11 and GHS12 by year's end.