Ghana is arranging for additional reserves to intervene sooner than planned in order to prop the local cedi currency which has weakened to new lows this week, two central bank sources said on Thursday. The cedi has been under pressure since early February after the new government announced it had uncovered contract arrears of $1.6 billion and a budget deficit close to double digits, compared to the 2016 target of 5.25 percent of gross domestic product.
The comments ruffled risk-averse investors, leading to a surge in offshore dollar demand amid a seasonal liquidity crunch as local businesses settle their first quarter import bills. "It's a worry but the central bank is working to hold it in collaboration with the fiscal authorities," one source said. "We are arranging for additional reserves to boost our interventions...going forward, the plan is to front-load our (interbank) presence," another source said, declining to provide details on the additional funding source.