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Ghana Holds Key Rate at 3 1/2-Year High to Support Cedi
Posted on: 01-Aug-2013        
Ghana’s central bank left its key interest rate unchanged at a 3 1/2 year high as it seeks to arrest the currency’s slide to a record low.

The Bank of Ghana maintained the benchmark interest rate at 16 percent, Governor Kofi Wampah told reporters today in the capital, Accra. Seven out of eight economists surveyed by Bloomberg predicted policy makers would hold interest rates steady, while one forecast an increase of 50 basis points, or 0.5 percentage point.

The currency of the world’s second-biggest cocoa producer declined 7.8 percent against the dollar this year amid increased demand from manufacturers and traders for the U.S. currency in the import-dependent economy. That’s adding to pressure on inflation, which accelerated for a fifth month to 11.4 percent in June.

The Monetary Policy Committee surprised economists by raising the key rate by one percentage point in May to help stabilize the currency. Proceeds from a $750 million Eurobond sale last week and loans for cocoa purchases may boost dollar reserves, providing support for the cedi.

The cedi weakened as much as 2.4 percent to 2.1150 against the dollar today. It reached 2.12 on July 29, its worst intraday level on record, according to data compiled by Bloomberg dating to June 1994.