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Ghana cedi extend gains against dollar

Ghana cedi currency extended gains against the U.S. dollar on Wednesday on weak corporate demand for the greenback, muted by improved inflows, mainly from offshore investors buying government bonds, traders said.

The currency of the West African cocoa, gold and oil exporter rebounded in July after slumping 18 percent in the first half of the year on strong dollar demands by firms for imports to drive the economy.

Barclays Bank Ghana trader Jacob Brobbey said the cedi gained 0.05 percent from Wednesday’s open to close at 1.8955/80 to the dollar.

On Friday, the local currency jumped 1.1 percent versus the greenback to close offered at 1.9025.

“The cedi rally appears not done yet and may attempt a break of the 1.8900 level before the close of the week,” Brobbey said.

Brobbey said the main driver for the cedi’s current stability was improved dollar supply, especially from offshore, after the central bank adopted liquidity mopping measures and sold medium-term bonds to shore up the local unit.

On Wednesday, industry regulator Cocobod signed a syndicated loan totalling $1.5 billion with international banks for crop purchases in the 2012-13 season due to open next month.

The West African nation will hold presidential and parliamentary elections in December and there are investor uncertainty over the stability of the currency on fears of likely overspending by the government in order to win votes.

On Wednesday, the Bank of Ghana’s monetary policy committee held its key interest rate unchanged at 15 percent in order to consolidate the liquidity mopping and ward off inflationary pressures ahead of elections in December.

Annual inflation remained unchanged at 9.5 percent in August, the statistics office said on Wednesday, ending five months of small increases in the rate.

Via Reuters

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