Some bankers the B&FT had a chat with have expressed optimism in the cedi as it has showed some signs of stability in the last three months, noting that they do not expect any drastic change for the worse for the rest of the year.

With the arrival of the US$1billion Eurobond, the cocoa syndicated loan of US$1.8billion, announcement of an IMF bail-out and relaxing of forex guidelines since August, the cedi -- which plummeted to almost GH¢4 per dollar in July -- is now trading close to GH¢3 per dollar.

The cedi came under pressure in the early part of the year as demand for dollars to import oil and other commodities surged.

Described as the world’s worst-performing currency this year, the cedi dropped by almost 40 percent against the dollar and other trading currencies from January, before seeing a turnaround in the last couple of months to allay fears of investors and businessmen in the country.

“I am optimistic that the currency will remain stable till the end of the year. Looking at the oil and gas sector, if we are able to domestically use gas to power our thermal generating plants, we won’treturn to the previous situation,” Alhassan Andani, Stanbic Bank’s Chief Executive, said.

Every three weeks, the country needs US$55million to purchase crude oil to power its thermal plants, in addition to the oil which is processed into petrol and other fuels.

The country also needs 350million standard cubic feet of gas per day to power all its thermal plants, which will reduce the need to import crude oil that is twice as expensive as gas. After a protracted construction phase, the Atuabo gas project is now on the cusp of producing its first volumes of gas.

Mr. Andani believes the savings alone that can be accumulated from using gas will ensure “we have enough dollars to attend to other issues. If we are able to solve our gas problems there will be a huge relief. Atuabo has the capacity and we still have the West African gas pipeline to support it”.

Dzifa Amegashie, Head of Investor Relations at CAL Bank, concurred with the Stanbic Chief that things will be stable during the rest of the year.

“The stability will be there. There is nothing in the market at the moment to rock the boat. Everybody is waiting for the IMF package and there is nothing untoward that can happen. From our perspective, there are no shocks or unexpected government issues in terms of revenue or expenditure. For November and December, everything will be stable.”

Standard Chartered Bank’s CEO, Kweku Bedu-Addo, also added that the situation from now to the end of the year will be as it is now.

“It has been a difficult year both for the local economy and on the international front -- we began the year with significant domestic and external vulnerabilities coming on the back of a large fiscal deficit, rising inflation and a depreciating cedi.

“Although some of these problems still exist as we head to the twilight of the year, we are beginning to see some mixed signals on the horizon and 2014 should hopefully close on a good note.”

Collins Appiah, an economist and market analyst at NDK Asset Management, said despite the current stability, if government does not reduce its borrowing to reduce interest rates on government securities, then the stability will be short-lived.

“The trend we are seeing now will continue till the end of the year. The probability of the cedi appreciating against the dollar is there; the probability of stability is there; but the probability of depreciation is not there.

“If government is willing to slow down on borrowing, then interest rates can come down anytime. For now it seems it cannot do that, because it has to service Single Spine promises and some obligatory promises in the budget,” Mr. Appiah said.

Market analysts at the Ecobank Research say that the exchange rate stability around GHS3.20-25:USD1 is likely to continue for as long as the prospect of an agreement on an IMF programme remains in place

However, GHS pressures will remain acute in a context of high import demand and high GHS liquidity. Further fall in gold and oil prices add pressure on FX reserves, which in turn undermines the GHS outlook.

Failure of government and IMF to agree on reform programme, which would set back stabilisation efforts.

The report says that if there is no IMF programme in place by early 2015, Monetary Policy Rate would need to rise to counter inflation-inducing higher government spending. Domestic-driven exchange rate risk is compounded by effect of US monetary policy normalisation.

Further positive news came last week following release of the quarter-three results from the Association of Ghana Industries’ (AGI) Business Barometer Indicator, which measures the level of confidence in the business environment. The barometer showed that businesses are beginning to regain some confidence in the business environment.

Although the business confidence index is still way below the base figure of 100, the AGI has seen a reversal of the trend to 42, after the index had dipped steeply to an all-time low of 22.42 in the second quarter.

The AGI urged government “to maintain fiscal discipline” and support businesses to come out of the woods.