Ghana’s foreign exchange reserves drops by over 10%

By Sam Edem
Ghana's FX Reserve
Ghana's FX Reserve

Ghana’s foreign exchange reserves experienced a dip of over 10% between June and August. This was contained in a report by an Ecobank sponsored research.

According to the report, the nation’s foreign exchange reserves witnessed a brief drop of about 13.3%: from US$ 5.77 billion recorded in June to US$5.1 billion in August 2017 - an equivalent of about three (3) months of import cover.

The Ecobank Research report indicated that the dip was as a result of the gradual weakening in the trade balance during the second quarter of the year – particularly, global Cocoa prices which were slightly lower than those of last year -2016 despite production a consistently high production levels. Cocoa is currently selling at about $2,116.

However, the report stated that, “recent signing of a COCOBOD loan agreement for $1.3bn for the 2017/18 season is set to provide a momentary uplift in quarter four 2017”.

In addition, it indicated that the issuance of a three-year domestic dollar bond to develop local funding sources for supporting the economy is expected to boost the nation’s secondary reserves.

In an earlier development which supports the possibility of an improved reserve, BMI (a research subsidiary of ratings agency – Fitch), has predicted that cocoa production levels will increase by an average of 21.5% by the close of 2017.

BMI claims the cocoa production increase will occur independent of the existing low price trend on the global market.