November 14, 2017 / 3:02 PM / in 3 days

Ghana's cedi at eight-month low as corporate dollar demand surges

ACCRA (Reuters) - Ghana’s cedi currency weakened to the lowest level in nearly eight months on Tuesday as local businesses sought more dollars for their end-of-year imports, analysts said.

A man trades U.S. dollars for Ghanaian cedis at a currency exchange office in Accra, Ghana, June 15, 2015. Picture taken June 15. REUTERS/Francis Kokoroko

The cedi, which had been fairly stable in the second half this year, began slipping this month on speculative activity following the government’s failure to meet its sale target for a six-billion-cedi energy bond.

It touched 4.5 to the greenback at midday on Tuesday from Monday’s 4.46 close, down six percent since January, according to Reuters data.

“Speculative currency traders are unwinding in the wake of what the markets considered a not-well-thought-of bond sale - it’s unsettling investors,” a commercial bank currency dealer told Reuters.

In its daily market update on Tuesday, Barclays Bank Ghana said dollars were hard to come by in the previous trading session. “Demand was seen on all fronts,” it said.

The currency plunged to an all-time low in March when it traded at 4.7 to the dollar.

Ghana’s finance minister Ken Ofori-Atta will present the 2018 budget to parliament on Wednesday amid government hints of a 25 percent cut in electricity tariffs mainly for industrial consumers.

The budget, the second since President Nana Akufo-Addo assumed office in January, is also expected to outline measures to enhance revenue, lift agriculture production and create jobs, a government source told Reuters.

Ghana, which exports cocoa, gold and oil, is following a credit programme by the International Monetary Fund to rein in its fiscal deficit and public debt while stabilising the volatile local currency.

Reporting by Kwasi Kpodo; editing by Mark Heinrich

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