Ghana’s three-month borrowing costs are set to rise to the highest in more than three years by December as the central bank continues measures to bolster the slumping cedi, according to Databank Financial Services Ltd.
The benchmark 91-day Treasury bill yield may climb to 25 percent, Daniel Ogbarmey Tetteh, head of asset management at Databank, based in Accra, said in an interview yesterday. That would be the highest since Nov. 20, 2009, according to data compiled by Bloomberg. The rate declined for the first time since Jan. 30 at the June 8 auction, dropping 47 basis points, or 0.47 percentage point, to 20.2 percent.
“It will inch up but I expect it to stabilize around the mid-20s,” Tetteh said. The Bank of Ghana will use the higher yield as an attempt to stop the depreciation in the local currency, he said.
The central bank is looking to reduce the amount of cedis in the market to shore up the currency, which has slipped almost 15 percent this year against the dollar, the worst performer in Africa after the Malawian kwacha. The cedi declined 1.2 percent to 1.9255 per dollar by 4:50 p.m. in Accra, the weakest since at least June 1993 when Bloomberg began compiling the data.
The depreciation of the cedi drove inflation to 9.1 percent in April, a 14-month high and above the bank’s 2012 target of 8.5 percent. The rate probably accelerated to 9.3 percent in May, Nii Ampa-Sowa, head of research at Databank, said in an e- mailed note. The Ghana Statistical Service will announce the inflation rate tomorrow at 10 a.m.
The central bank increased its policy interest rate for the second consecutive time by 100 basis points to 14.5 percent on April 13. Seven of 10 economists surveyed by Bloomberg expect the bank to increase the rate by another 100 basis points when the Monetary Policy Committee announces its decision tomorrow at about 11 a.m.
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