The Bank of Ghana (BoG) says it has substantial buffers to defend the cedi and “completely disagrees” with a forecast that the currency will depreciate by a further 10 percent against the dollar by year-end.

The cedi has already weakened by about 6.3 percent against the dollar in 2013, according to official interbank exchange rates published by the BoG.

Reacting to the grim forecast, which was made by French bank Societe Generale SA on August 20, the BoG’s Head of Treasury, Adams Nyinaku, said the Central Bank expects to accumulate US$6billion of foreign exchange reserves by year-end, which will maintain the cedi’s stability. In the month to September 3, the currency lost a meagre 0.2 percent against the greenback.

“Through the Eurobond, we increased the reserves to US$5.8billion; and later this month Cocobod will bring in US$1.2billion through its syndicated loan. These inflows will make up for the decline in commodity prices,” Mr. Nyinaku told the B&FT in an interview.

Souheir Asba, a London-based emerging-markets strategist for the French bank, had told Bloomberg the cedi would continue to fall steeply on the back of rising inflation and weak commodity prices, which would reduce foreign exchange inflows to the Central Bank. The decline in the gold price may cost the BoG US$2.6billion in lost reserves, Ms. Asba had said.

According to the BoG, however, inflows from the gold sector have been strong despite falling prices, as companies have been surrendering a lot of their earnings to the Central Bank. “Just last week, we received US$13million from gold inflows,” Mr. Nyinaku said.

Later this month, Cocobod will be drawing its US$1.2billion syndicated loan for cocoa beans purchases, which will further boost the reserves, he added. The state-owned cocoa buyer has paid off last year’s international cocoa loan, and the upcoming inflows will be used to purchase beans in the next season beginning in October.

Mr. Nyinaku said the receipt of US$750million -- being the cash component of the country’s second Eurobond sold in July -- was a major boon to the reserves, as the BoG had not anticipated the inflows at beginning of the year.

The Bank targetted reserves equivalent to three months of imports at the start of the year, but by year-end the stock expected is likely to exceed this level.

Kweku Ricketts-Hagan, a Deputy Minister of Finance, also said in an interview that the projection of further depreciation by Societe General failed to take account of the BoG’s ongoing mitigation measures, such as the rapid build-up of reserves.

“There are all sorts of pressures that affect our currency, but there is also a positive side to it if we build our reserves. And our reserves are being built to cushion the currency,” he said. “The Eurobond has put money in the Central Bank’s reserve account; and as the cocoa syndicated loan comes, that will also build the reserves. So I don’t entirely agree with the projection.”

In 2012, the cedi was notoriously volatile -- losing 17.5 percent to the dollar as investors feared a re-enactment of previous episodes of election-related fiscal slippage. True to their apprehensions, the government ended the fiscal year with an 11.8-percent-of-GDP deficit -- almost twice the level that had been projected.

The International Monetary Fund (IMF) has recommended the BoG target reserves of around US$8.1billion, or the equivalent of 4.2 months of imports, to limit the cost of a crisis in the event of a large shock to the economy.