Accra - Ghana’s cedi is heading for the biggest weekly gain in more than 14 years on speculation a $1 billion (R11 billion) Eurobond sale will boost foreign-exchange supplies as the nation seeks International Monetary Fund budget support.
The cedi strengthened 3 percent to 3.53 per dollar by 10:57 am in the capital Accra.
That extended its five-day appreciation to 6.7 percent, the biggest weekly increase since January 2000, according to data compiled by Bloomberg.
The currency’s advance this week pared losses for 2014 to 33 percent, the most in the world after the Ukrainian hryvnia.
“Positive sentiment engendered by prospects of Eurobond money coming in and plans to sign deals with the IMF can explain why the cedi has recovered this week,” Yvonne Mhango, sub-Saharan Africa economist at Renaissance Capital, said by phone from Johannesburg today.
“An injection of foreign exchange will help alleviate some of the pressures on the currency side.”
Ghana sold Eurobonds due January 2026 less than a week before the arrival of an IMF mission intended to help combat fiscal overruns, waning foreign-exchange reserves and accelerating inflation spurred by the currency’s rout.
Investors demanded the second-highest yield on a sovereign dollar bond this year as Ghana’s rising debt burden spurred Moody’s Investors Service to cut the nation’s credit rating in June.
The West African nation priced the amortising notes to pay 8.25 percent, or 5.72 percentage points more than similar-maturity US Treasuries, according to data compiled by Bloomberg.
The cedi has rallied 9.1 percent over the past month, the most of 24 African currencies tracked by Bloomberg. - Bloomberg News