Ghana’s cedi weakened to the lowest in almost 19 years as banks sought dollars to meet demand from clients in West Africa’s second-biggest economy.
The currency of the world’s second-biggest cocoa producer depreciated by 1.2 percent to 1.9255 per dollar by 4:53 p.m. in Accra, the lowest on a closing basis since at least June 1993 when Bloomberg began compiling the data.
“Banks constitute about 98 percent of the demand on the market,” Richard Dei-Tutu, a currency trader at CAL Bank Ltd. (CAL), an Accra-based lender, said by phone today. “The market is not liquid while all these banks have demand from their customers to meet.” Dei-Tutu said the lenders’ clients include telecommunications companies and manufacturing firms.
The weakening currency pushed inflation in import-dependent Ghana to 9.1 percent in April, a 14-month high and above the central bank’s 2012 target of 8.5 percent. The bank increased its policy rate for a second consecutive time by 100 basis points to 14.5 percent on April 13 to bolster the cedi. Seven of the 10 economists surveyed by Bloomberg expect the rate to rise by another 100 basis points tomorrow when the bank announces its latest interest rate decision at about 11 a.m. in Accra.
The central bank on April 30 told lenders to hold all reserves in the local currency and re-introduced Treasury bills with maturities of 30, 60 and 270 days to help boost the cedi.
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