Ghana Cedi to Rebound From 18-Year Low, Renaissance Says
January 19, 2012, 6:28 AM ESTBy Moses Mozart Dzawu
(Updates with comment from economist in third paragraph.)
Jan. 19 (Bloomberg) -- Ghana’s cedi will rebound from the lowest in at least 18 years against the dollar as the country’s oil output has yet to peak and as the price of gold, its biggest export, increases, according to Renaissance Capital.
The West African nation’s currency will stabilize at 1.70 in 2012, Yvonne Mhango, a Johannesburg-based sub-Saharan Africa economist with Renaissance, wrote in an e-mailed note to clients today. The currency of the world’s second-biggest cocoa producer slipped to 1.7470 per dollar as of 10:17 a.m. in Accra, the capital, the lowest since at least May 1994 when Bloomberg began compiling the data. It’s the worst-performing currency against the dollar this year, having weakened 6.2 percent.
“The introduction of crude oil as an export in 2011 was positive for Ghana’s external sector,” Mhango wrote. With daily oil production that was expected to peak in third quarter of 2011 now delayed to 2013, there is “upside potential for oil exports” this year, she said. Renaissance expects earnings from oil shipments to increase by about 20 percent this year from 2011.
Daily oil output at the Jubilee field will range from 70,000 barrels to 90,000 barrels this year and ramp up to 120,000 barrels next year, field operator Tullow Oil Plc said yesterday.
Gold prices will “increase significantly in 2012 to an average of $1,738 an ounce,” Mhango forecast in the note. The “strong correlation between the gold price and the country’s foreign-currency reserves suggests reserves will continue to improve in 2012, which would be positive for the cedi.”
If the cedi’s depreciation persists, the central bank may start increasing interest rates in the first half of 2012 to curb inflation risks, said Mhango.
The Accra-based Bank of Ghana maintained the policy interest rate at 12.5 percent for the third consecutive meeting on Dec. 21.
--Editors: Emily Bowers, Ana Monteiro
To contact the 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
