Ghana cedi weakens to six-month low before budget review

Business News of Thursday, 12 March 2015

Source: Bloomberg.com

Seth Terkper Side

Ghana’s cedi headed for the lowest closing level in six months before Finance Minister Seth Terkper presents a revised 2015 budget to parliament and as mining companies demanded higher rates for dollars.

The government of West Africa’s second-biggest economy is seeking to curb inflation and stabilize a currency that’s slid 11 percent this year, the most among 24 African currencies tracked by Bloomberg after Zambia’s kwacha. Terkper may cut spending to stick to budget-deficit targets while lowering the 2015 growth forecast to 2.7 percent from 3.9 percent previously, Parliament’s finance committee said March 9.

The central bank hasn’t sold dollars for almost a month, allowing mining companies in Africa’s second-biggest gold producer to push for bigger premiums for greenbacks, Nana Yankson, a currency trader at Universal Merchant Bank Ltd. in the capital Accra, said by phone.

“Supply has gone down,” Yankson said. “Mining companies, which are among the biggest suppliers, are asking for higher rates.”

The cedi weakened as much as 3.1 percent to 3.645 per dollar, the lowest level since Sept. 8 on a closing basis, before paring losses to trade at 3.6 as of 2:33 p.m. in Accra.

There are “more than enough” dollars in the market and demand for the currency is being driven by seasonal factors, Yao Abalo, head of treasury at the central bank, said by phone from the capital, declining to give details on the regulator’s foreign-exchange sales.

The government reached an agreement with the International Monetary Fund last month for almost $1 billion of loans to support the budget and boost foreign-currency reserves.

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