The local currency remained stable against the USD in the interbank market last week due to central bank intervention to meet corporate demand. The GHS depreciated marginally by 0.01%against the USD to an average fx rate of GHS4.4185 (versus 4.4182 in the previous week), but recovered strongly against other major trading currencies such as EUR and GBP as shown in the chart below.

The local currency has remained relatively stable this year compared to the previous year as shown in the chart below. We remain bullish on the outlook for the local currency against the USD on the back higher gross international reserves of about US$7.55 billion (4.3 months of import cover), which should enable the central bank to intervene in the market to support the local currency when needed. Consequently, the GHS is expected to remain stable against the USD this week as the central bank supplies USD to meet anticipated corporate demand.

In addition, Ghana's current account deficit continues to narrow on the back of trade surplus emanating from increased export revenues and lower non-oil imports. Central bank figures indicate that the current account deficit narrowed to 4.6% of GDP in December 2017 from 6.6% of GDP in December 2016, buoyed by a trade surplus of US$1.07 billion (2.3% of GDP) in December 2017 from a trade deficit of US$1.77 billion (4.2% of GDP) in December 2016. Ghana's export revenue increased by 23.5%y/y to US$13.75 billion in 2017, driven by increased oil production and favorable commodity prices (crude oil and gold).

We expect Ghana to maintain strong level of international reserves in 2018 on the back of increased oil exports, COCOBOD syndication proceeds, proceeds from an anticipated Eurobond issuance and USD inflows from foreign investors purchasing local bonds.