Bloomberg News

Ghana Targets Cedi Strengthening of 5% This Year, Narh Says

June 07, 2011

(Updates with analyst’s comment in third paragraph.)

June 7 (Bloomberg) -- Ghana’s central bank is targeting an appreciation of 5 percent for the nation’s currency this year and will be able to sustain inflation of about 9 percent, Deputy Governor Millison Narh said.

A 5 percent strengthening in the cedi is a “consistent end-of-year target,” he told reporters in London today. He didn’t specify which currency he uses as a benchmark. The currency of the world’s second-biggest cocoa producer after Ivory Coast has declined 2.1 percent against the dollar this year, and was 0.6 percent down at 1.5165 by 3:04 p.m. in Accra.

The increase in oil revenue in the second half of the year “would be enough to drive that level of appreciation,” David Cowan, a London-based Africa economist at Citigroup Inc., said by phone today. “They are aware of the dangers of excess appreciation, especially at the time when you’re running into elections in December 2012 and cocoa farmers are the ones who would be most negatively affected by an exchange-rate appreciation.”

The central bank lowered its benchmark rate to 13 percent from 13.5 percent on May 13, as inflation slowed to 9 percent in April from 9.1 percent the month before. Jubilee, Ghana’s first oil field, is currently producing around 70,000 barrels of crude a day, according to the U.K.-based operator Tullow Oil Plc.

Ghana is able to sustain an inflation rate of about 9 percent this year as the West African nation enters its harvesting season, which will keep food prices low, Narh said.

“We are entering the harvest season in May, June and July,” he said. If “food costs stay down in abundance it drives down inflation.”

To contact the reporter on this story: Chris Kay in London at

To contact the editor responsible for this story: Gavin Serkin at

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