The GHS remained under pressure in line with our expectations to weaken by 0.48%w/w to close the week at GHS4.3423 against the US$ on the back of strong corporate demand in the past month. We think that the central bank's failure to continue the fortnightly fx auction has been detrimental to the stability of the local currency in the second quarter of 2017. See below the weekly and YTD performance of the local currency.

We expect the local currency to remain relatively stable this week as a result of central bank intervention and slowdown in corporate demand later in the week. However, the cedi could depreciate marginally if corporate demand remains strong throughout the week.

… but medium-term outlook remains positive

However, we remain bullish on the medium-term outlook for the local currency, buoyed by higher foreign assets that should enable the central bank to intervene in the market to support the local currency. In addition, we expect Ghana's fx reserves to be significantly boosted by the upcoming issuance of a GHS10 billion 15-year energy bond. Furthermore, Ghana's current account deficit continues to narrow on the back of trade surplus (2.5% of GDP in April 2017) emanating from increased export revenues and lower non-oil imports. Central bank figures indicate that increased oil production and favorable commodity prices (gold and crude oil) are the key drivers of higher export receipts.