Written by Kwasi Kpodo | From Reuters

Ghana’s cedi currency is holding its ground against the dollar for the first time this year, traders and analysts said on Monday, after falling some 40 percent in the last eight months.

The government’s decision last month to go to the International Monetary Fund for an assistance programme to tackle Ghana’s fiscal woes has boosted capital inflows, traders said. Central bank support and sales by local mines have also supported the cedi.

At the same time, a seasonal slowdown in commerce has reduced demand for dollars – an effect that could buoy the cedi in the weeks ahead, they said.

Currency stability could help the government tackle fiscal woes including rising inflation and a stubborn budget deficit, which have taken the shine off an economy that had been growing strongly on the back of exports of gold, cocoa and oil.

It could also boost small- and medium-sized businesses, which have long complained that their expansion is limited by high interest rates.

“The cedi has been helped by improved (market) sentiment … and a developing risk-on posture as the market looks positively to the IMF programme, the Eurobond and cocoa flows,” said one analyst who declined to be named.

The currency traded on Monday near 3.8000 to the dollar, up from a record low of above 3.9000 in June.

Interbank trading, which has been dormant since February, sprang to life on Friday due to improved liquidity, analysts said.

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