Ghana’s cedi gained for the first quarter in three as traders anticipated dollar inflows from government’s planned Eurobond sale.
The currency of the world’s second-biggest cocoa producer advanced a fourth day, strengthening 0.4 percent to 3.7600 per dollar by 2:04 p.m. in the capital, Accra. That brought the gain since the beginning of July to 13 percent, the most in a quarter since Bloomberg started compiling the data in 1994. It had weakened 36 percent over the previous two quarters.
Ghana is concluding investor meetings in London on Wednesday for its third Eurobond sale in as many years. The nation is planning to raise $1 billion and the sale may price this week, according to a person familiar with the situation who asked not to be named because the information isn’t public.
“The Eurobond is part of it; with all this money coming in, the cedi will make some more gains,” Nana Yankson, a currency trader at Universal Merchant Bank Ltd. in Accra, said by phone. “There’s not a lot of demand for dollars, I think speculative buying has reduced.”
Ghana’s economy expanded at the slowest pace in a year in the second quarter, the statistics office said last week.
Gross domestic product rose 3.9 percent in the three months through June from a year ago, compared with a revised 4.3 percent in the first quarter, Baah Wadieh, an official at the Ghana Statistical Service, told reporters on Friday in the capital, Accra. The economy expanded 0.9 percent from the previous quarter.
West Africa’s second biggest economy is struggling in the face of falling oil and gold prices, power shortages and tighter monetary and fiscal policy. The government was forced to turn to the International Monetary Fund in April for a loan of almost $1 billion, and plans to sell its fourth and biggest Eurobond of $1.5 billion this month to help fund its budget and bolster the currency.
The cedi has weakened 16 percent against the dollar this year, pushing the inflation rate to 17.3 percent in August. The currency gained 1.3 percent to 3.81 per dollar at 11:15 a.m. in Accra. The Bank of Ghana increased the policy rate by 1 percentage point to 25 percent last week to help bring inflation back into the target of 6 percent to 10 percent.
The government is forecasting economic growth of 3.5 percent this year, which would be the slowest pace since 1994.
