Bloomberg News

Ghana Cedi Gains for 3rd Day as Bank Talks of Currency Auctions

October 19, 2011

Oct. 19 (Bloomberg) -- Ghana’s cedi gained for a third day as the central said it is considering regular dollar auctions as part of measures to support the currency of the world’s second- biggest cocoa producer.

The cedi appreciated as much as 0.3 percent to 1.6240 per dollar and was unchanged from yesterday’s close at 1.6295 by 4:11 p.m. in Accra, the capital, according to data compiled by Bloomberg. It has weakened 8.8 percent against the U.S. currency this year.

The Bank of Ghana is looking at “options” including auctions, selling dollars directly to currency traders and the use of “moral suasion” to compel interbank traders to quote competitive rates, Adams Nyinaku, head of treasury, said in an interview in Accra today. Traders “will be cautious of the rate they tender in, else the dollars will go to somebody else,” he said.

The bank will look to earnings from gold, cocoa and oil, the country’s three main exports, to build foreign reserves if it decides on the regular currency sales. “We can also buy foreign loans received by the government, such as the $3 billion loan being sourced from China Development Bank,” Nyinaku said.

The West Africa nation’s gold exports for the nine months through Sept. 30 were worth $3.7 billion, cocoa totaled $1.7 billion and oil exports were $1.9 billion, the central bank said today. Gross international reserves stood at $5.3 billion as of Oct. 13, enough to cover 3.8 months of imports, central bank Governor Kwesi Amissah-Arthur said today.

The plan “should be beneficial for the market in that it creates more transparency in how much they sell and what the actual demand in the market is,” Lourens Harmse, a currency trader at Absa Capital Ltd., said in an e-mailed comment today.

--Editors: Emily Bowers, Linda Shen.

To contact reporter on this story: Moses Mozart Dzawu in Accra at mdzawu@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net.


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