Ghana’s cedi showed signs of stabilising against the dollar on Thursday after the central bank stepped up its selling of dollars to the interbank market, traders said.
The local currency has fallen 22 percent since January, one of the sharpest declines in Africa. But on Thursday it rallied to 4.3850 against the dollar as of 1700 GMT from a record low of 4.4100 on Wednesday.
“There is marginal stability but we are yet to see if it’s sustainable,” Joseph Biggles Amponsah of the Accra-based Dortis Research said.
The central bank this week increased its interbank dollar sales to $20 million daily from $14 million a week previously in a renewed effort to ease the pressure on the cedi, its governor Henry Kofi Wampah told Reuters on Wednesday.
The central bank’s action appears to be in line with an agreement signed in April between the government of Ghana and the International Monetary Fund.
Under that deal, the bank’s net international reserves are expected to decline from around $1 billion to $331 million between April and August to reflect the pressures caused by seasonal flows of dollars through the economy.
“The central bank has been very visible in the past week and it’s already influencing the market. We believe the cedi can recover some of the losses if this continues,” Stanbic Bank Ghana trader Kofi Pianim said.
The cedi’s decline this year comes on top of a 31 percent drop in 2014 and a significant slide the previous year. Analysts say the recent decline is driven by speculation and unmet dollar demand by importers.
The losses are a concern to policy makers who hope the currency will stabilise as a consequence of the IMF deal, which is aimed at stabilising the west African country’s economy.
Ghana’s economy grew rapidly for years, powered by exports of cocoa, oil and gold. But growth has slowed sharply since 2014 due to a fall in commodity prices and fiscal problems that include a debt-to-GDP ratio of close to 70 percent.