adminfrontier currencies tend to come under pressure as shops stock up on the pricey imported goods that will appear beneath the Christmas trees of the continent’s expanding bourgeoisie.
Ghana’s cedi is the most-cited example, and maybe with good reason. Over the last decade the West African unit has properly bucked that trend only once – in 2009, as the currency bounced back from the emerging and frontier market sell-off that followed the collapse of Lehman Brothers in late 2008.
Recently, Uganda’s shilling has also been seen as susceptible to the festive fourth-quarter weakness.
But it becomes more difficult to explain away currency declines with glib references to Christmas shoppers when the falls occur in mid-September – as has happened with the cedi this week. “The cedi’s depreciation has come as a surprise especially when we are not yet in the last quarter of the year,” said Biggles Amponsah of Access Bank in the capital, Accra.
Instead of obsessing about Christmas presents, it might be more helpful to look at some of Ghana’s economic fundamentals, which suggest inherent currency weakness despite the advent, amid much fanfare, of oil revenues at the end of last year.
Initial output had been expected to normalise in the second quarter of 2011 at 120 000 barrels per day (bpd), rising to 250 000 bpd by 2013 to place Ghana among the world’s top 50 producers.
However, technical problems and underproduction have pushed that projected 120 000 bpd plateau back to the end of this year, meaning the flow of oil dollars throughout 2011 will have been far lessthan people were expecting 12 months ago. – Reuters.
Online Reporter