The cedi extended its gains against major trading currencies last week raising hopes that the local currency is beginning to steady ahead of a deal with the International Monetary Fund (IMF) later this quarter.

It appreciated against the US dollar, the euro and the British pound last week to extend the positive run over the last fortnight.

GCB Capital said in its weekly market update that the local currency gained 3.2 per cent vs the US dollar on the retail market last week and opened this week strongly against the three major trading currencies.

It, however, noted that Ghana’s gross reserve is threadbare, and the cedi remains volatile and news-sensitive.

“The prevailing uncertainty and external monetary policy developments could keep the local currency volatile until an IMF board-level approval, the research arm of the investment fund said.

Rocked by faltering reserves and large twin deficits, Ghana has been putting its house in order to help earn a US$3 billion bailout from the IMF.

The government launched a domestic debt exchange programme (DDEP) in December in which it requires investors in its cedi debts to swap their existing holdings for new ones that have a maximum maturity of five years.

The offer is optional, the government said in a January 31 release that also announced the extension of the programme for the fourth time in a row.

That release also revised the terms of the debt swap in response to protests and resistance from business associations and individual bondholders that have constituted themselves into groups.

The programme was also extended on Tuesday, February7 to February10 over what was described as administrative glitches.

The debt swap is an urgent necessity to make the country’s debt sustainable, which is a prerequisite to sealing the US$3 billion bailout.

An IMF staff-level agreement was received in December.

SOURCE : Graphiconline