From Bloomberg

Measures planned by the Bank of Ghana to control lenders’ foreign-exchange trading may not halt a slide in the cedi as it heads for a 19th straight annual depreciation against the dollar, Standard Bank Group Ltd. said.

Budget and current-account deficits in the West African nation, which has the region’s second-largest economy, will determine the cedi’s rate more than the central bank’s plan to introduce new trading rules and direct lenders to report prices on a common platform, Samir Gadio, an emerging-markets strategist at Standard Bank’s London unit, said in an e-mailed response to questions on Dec. 17.

“The root cause remains the sizable fiscal deficit, which adds to aggregate demand and external imbalances,” he said. “There’s a need for further fiscal consolidation and measures to slow economic growth if one wants to reduce the pace of depreciation of the cedi.”

The currency of the world’s second-biggest cocoa producer plummeted 15 percent this year against the dollar, driving up inflation as Ghana missed a target to reduce the budget deficit to 9 percent of gross domestic product. The cedi’s decline is the worst among 22 African currencies tracked by Bloomberg after the South African rand, the Malawian kwacha and Sudan’s pound.

Written by Moses Mozart Dzaw | Read more at Bloomberg