Ghana\u2019s cedi is at risk of weakening as much as another 19 percent this year as the world\u2019s second-biggest cocoa producer struggles to rein in a budget deficit, according to HFC Bank Ghana Ltd.<\/p>\n
The cedi may fall to 3.50 and 4 per dollar, Benjamin Dzoboku, head of treasury at the Accra-based lender, said in an interview in the city yesterday. It dropped 0.8 percent to 3.26 per dollar by 4 p.m. in Accra. The currency of West Africa\u2019s second-biggest economy depreciated 27 percent this year, the most among 24 African currencies tracked by Bloomberg.<\/p>\n
Moody\u2019s Investors Service predicts the fiscal gap will exceed 10 percent of gross domestic product for a third consecutive year. The slide in the currency is spurring the price of everything from sugar to fuel in a nation that relies on imports to feed an economy that expanded 6.7 percent in the first quarter. Inflation quickened to 14.8 percent in May and producer prices rose 33.1 percent.<\/p>\n
\u201cDemand for dollars for importation is still high and that is the main pressure on the cedi,\u201d Dzoboku said.\u201cThe government\u2019s own demand for dollars for projects and to settle debt is also high.\u201d<\/p>\n
The central bank will probably raise interest rates by 200 basis points at its next meeting on July 9 to contain inflation at a four-year high and make cedi assets more attractive, Dzoboku said. The Bank of Ghana left the key rate unchanged at 18 percent on April 2. The increase may not be enough to ward off more cedi weakness, he said.<\/p>\n
Foreign Accounts<\/strong><\/p>\n The government may have to borrow from the International Monetary Fund to bolster its falling foreign-exchange reserves, an option that will be cheaper than selling Eurobonds for the third time, said Dzoboku.<\/p>\n Foreign-currency account holders lost confidence in the Ghanaian banking system after the central bank announced tight foreign-exchange measures on Feb. 5, Dzoboku said. The measures were eased on June 13.<\/p>\n \u201cMost non-resident customers transfered their dollars abroad,\u201d said Dzoboku of HFC, Ghana\u2019s fifth-biggest bank by market value. \u201cI\u2019ve not seen any of those transfers reversed after the rules were eased.\u201d<\/p>\n <\/p>\n Source: bloomberg.com<\/p>\n","protected":false},"excerpt":{"rendered":" Ghana\u2019s cedi is at risk of weakening as much as another 19 percent this year as the world\u2019s second-biggest cocoa producer struggles to rein in a budget deficit, according to HFC Bank Ghana Ltd. The cedi may fall to 3.50 and 4 per dollar, Benjamin Dzoboku, head of treasury at the Accra-based lender, said in […]<\/p>\n","protected":false},"author":14,"featured_media":18689,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[43,38,4],"yoast_head":"\n