Ghana's central bank expects the local cedi currency to recover as it sells more dollars to local banks, it said on Thursday. The cedi has declined steadily against the dollar since the end of April, partly due to broader weakness in emerging markets and to a rise in the American currency.
Steve Opata, head of financial markets at the central bank, told Reuters the bank was acting to stem the depreciation, which traders estimate at nearly 3 percent since January. "We have increased our presence in the interbank market and we've done some significant interventions in the past two weeks. That's beginning to lead to some stability," said Opata.
A market note published by Barclays Bank Ghana on Thursday said the central bank sold around $30 million on Wednesday. Opata said the cedi's recent slide was also caused by concerns over the potential repatriation of funds by the Ghanaian arm of South African mobile firm MTN, which launched an initial public offering of nearly $750 million late last month.
"The Bank of Ghana is also engaging the management of MTN Ghana to ensure that any FX outflows arising from the transaction are done in a phased and orderly manner," said Opata. Ghana, which exports cocoa, gold and oil, is in the final year of a $918 million credit deal signed in 2015 with the International Monetary Fund to reduce its budget deficit, inflation, debt and to stabilise the local currency.
Opata said the cedi, which declined by around 5 percent last year, was expected to strengthen in 2018 as Ghana had built-up its reserves to $8.1 billion by the end of May. "We are in good shape with our economic fundamentals ... we have adequate reserves and these global and domestic developments do not yet pose a threat to inflation in Ghana in the near term," he said.