The cedi rose by 4.27 percent last Friday to its highest level since early February as increased dollar sales by the central bank and donor inflows consolidated a bounce after months of decline.
The gains will likely be seen as evidence of the impact of Ghana’s aid programme with the International Monetary Fund (IMF), which started in April and is aimed at stabilising its economy and jumpstarting growth.
Ghana’s rapid GDP growth through its exports of gold, oil and cocoa hit the buffers in 2014 due to lower global commodity prices and a fiscal crisis.
The cedi stood at 3.3500 on Friday afternoon, 8 per cent lower than the start of the year, after touching 3.300 an hour earlier, according to Thomson Reuters data. Last month it stood 22 per cent lower than at the beginning of 2015.
The central bank in June increased its dollar sales in the interbank market to $20 million a day up from $14 million a week and is set to sustain that in the months ahead.
“The cedi has appreciated a lot in a short space of time. However, it is it’s sustainability at these levels that matters,” said Standard Chartered Bank’s Global research head Razia Khan, adding that a key factor will be purchases by investors of cedi-denominated assets.
The Bank’s Monetary Policy Committee will announce its benchmark rate decision on Wednesday after it hiked it by 100 basis to 22 per cent in May, citing inflationary pressures. Khan said the cedi’s gains made a further rate less likely.
“Although inflation is likely to remain elevated in the very near term, growth is slow and both the fiscal and monetary measures required by the IMF programme will bring about a tightening of their own,” she said.