$2bn Cocoa loan, plus other loans to help stabilise cedi in Q4
The cedi’s depreciation against its anchor currency – the US dollar – is expected to stabilise in the fourth quarter of this year.
This anticipation by currency analysts comes on the back of some $2bn foreign exchange inflows from the COCOBOD syndicated loan as well as the $750m loan approved by Parliament last month.
The COCOBOD syndicated loan for the next cocoa season, is expected to bring in a total foreign inflows of $1.3bn.
The cedi at close of last month – July 202 – is reported to have depreciated by 7% to the dollar, taking the year-to-date depreciation of the cedi to 20.5% on the interbank market.
The decline in the value of the local currency for last month has been attributed to the high demand for the greenback, coupled with other factors such as weak balance of payments position of he country and liquidating of investments in government bonds.
According to currency analyst, Courage Martey, the cedi has started the third quarter on a difficult note.
“The cedi has also started the third quarter on a pretty difficult note; in the month of July alone, the local currency has lost way over 7% against the US dollar and over 26% on a year-to-date basis [retail market]. That is way very sharp depreciation so far this year, and August [2022] has also started on a similar note on its own set back of weakening of the currency, which is really not good”
“And the situation has also not helped by the fact that the Central Bank [BoG] has reduced the sizes on the bi-weekly auction where the size has been reduced by 50% to $25 million per auction. Given the sizeable level of demand, we have on the market that reduction has widen the demand supply gap”, he remarked.
He further said that the demand for the dollar which is four times the $25 million allotment is telling on significantly in terms of the rate of depreciation of the cedi.
For the near-term outlook, Mr. Martey pointed out that “we think it remains bearish amid the elevated month and limited sources of supply.”
“And talking of supply, we are expecting that by the 4th quarter, we should see some two billion dollars coming through. This $2 billion is composed of the $750 million facility by Parliament. We are hopeful that government will finalise the term of credit with the lenders and settle on a favorable term and allow the disbursements. Then the COCOBOD $1.3 billion syndicated loan has been approved by Parliament, and we expect that to come through in tranches in the 4th quarter,” he added.
