The Centre for Economics Finance and Inequality Studies (CEFIS) has sparked further fears of inflation in Ghana as it predicts that the country’s local currency will hit GH¢7.03 in exchange for a single US dollar by end of the year.
According to a report by the research firm, titled ‘Ghana Cedi Outlook on the Forex Market 2022’, local inflation will be the main driver of the cedi depreciation.
Ghana’s inflation rate, according to the Ghana Statistical Service (GSS), at the end of 2021 stood at 12.6 percent – a significant increase from the 10 percent recorded two years ago.
Despite this gloomy prediction, the Bank of Ghana is claiming it is confident of a bounce-back because Ghana has a strong reserve position. But the CEFIS has debunked this notion, saying the reserves will not see much improvement this year.
“The increasing level of monetary policy rates over the recent quarters does not predict a decrease in price levels. This coupled with the not too pleasant macroeconomic variables all point to the fact that inflation will largely continue to rise in 2022, albeit at a slow rate, “CEFIS noted in their report.
“We expect imports to increase in the year 2022, this notwithstanding the likely imposition of the controversial reversal of the benchmark value discount on selected imported goods. Imports will increase in the short- to medium-term…the international reserves, in many instances, are used to manage the exchange rate. In the case of the Ghana cedi exchange rate against its trading partners, we do not foresee a massive improvement in the international reserves,” the report read.
