The local currency last week recorded its biggest gain against the US dollar this year, when it closed trading on Friday gaining 7.8 percent in value.
The cedi’s strong performance is in marked contrast to what the market has become accustomed to over the first half of this year, when the cedi depreciated by more than 26 percent against the US dollar.
The blighted currency on July 2 made a 3.5 percent gain over the US dollar – but that record was even better the following day when the cedi recorded a stunning 4.2 percent gain against its major trading partner to bring down the level of depreciation against the dollar to 20.4 percent from a peak of 26.2 percent on June 30.
The local currency, after closing trade on June 30 at GHȻ4.3364 bounced back at GHȻ4.1914 the next trading day, and finished the week at GHȻ4.0217.
New-found strength
The cedi’s new-found strength comes barely a fortnight after the central bank announced that it had increased its dollar sales in the interbank market to US$20 million a day up from US$14 million a week in a bid to halt the dangerous slide of the local currency.
“We have raised our intervention significantly over the past two weeks. This is going to continue and we will do more as and when necessary to ease pressure on the cedi,” the central bank’s governor Henry Kofi Wampah told Reuters last week.
According to him, the robust interbank intervention will continue and he expects dollar inflows from donors, a Eurobond and cocoa loan, to boost the central bank’s foreign exchange reserves.
Apart from the Bank of Ghana ramping up its daily dollar sales, analysts also attribute the cedi’s massive gains to improving sentiments in the economy after the International Monetary Fund issued a particularly optimistic statement about the progress of ongoing fiscal consolidation.
The Washington-based lender said its US$918 million fiscal stability programme with Ghana is on track, and that government has met almost all performance criteria.
Credit: B&FT
