The Ghana cedi could stabilise strongly against the US dollar and other major trading currencies in the coming months.
This is projection based on the expected inflows from the Cocoa Loan Syndication and recent five-year Eurobond issued.
These could result in about ¢2.5 billion hitting Bank of Ghana (BoG)’s account by the end of September or latest the first week of October.
Inflows from the Eurobond could bring in a little over $700 million.
However, some $400 million of the Eurobond funds will be used by government to finance 2007 Eurobond that will mature, next year, leaving about ¢350 million at the Central Bank.
But a source close to government is insisting that the main purpose of raising funds are not meant to shore up the cedi’s value, but mainly for refining the bonds and funding some infrastructure projects.
Some analysts have maintained that even if the BoG does not use the funds to shore up thecedi’s value, the news about the inflows and the Central Bank’s improved forex position, might prevent the practice where businesses and individual purchase dollars when they don’t actually need them.
But they have to go out for it, just because they fear that the local currency will depreciate against the dollar and other major international currencies.
The Cocoa Loan Syndication, which will be signed in Frankfurt, Germany next week with some banks, should also bring in some ¢1.8 billion.
Putting all these inflows together could result in BoG’s international reserves increase to a little over ¢7.5 billion given that is if there has not been any significant reduction in the Central Bank’s reserves.
This is because, as at June 2016, the reserves stood at $5.2 billion.
The cedi is currently trading at around GH¢3.95 against the dollar among some commercial banks. For some analysts, a stable cedi could reduce the cost of living, reduce the cost operations for businesses and impact inflation rate positively.
This development may also lead to a reduction in prices of petroleum products because a stable cedi will not result in most of the importers looking for more cedi to finance the same volumes of petroleum products.
It would also help government make some savings to deal with other infrastructure projects.
According to the supplementary budget, government may have to set $10.5 billion to take care of interest payments.