Cedi is Africa’s third-worst performing currency this year – According Bloomberg reports
Ghana’s cedi, which is now the third worst performing currency in Africa, could still be in for a rough ride.
The currency, which has already dropped more than 7% vs the dollar, is expected to weaken further, according to analysts, even with the $3 billion rescue provided by the IMF in the wake of the nation’s 2022 default.
Ghana is still working to reach an agreement with eurobond investors, despite having won workouts with both its official and domestic creditors. Furthermore, even if the nation’s foreign reserves increased to $5.9 billion in December, a 10-month high, they are still insufficient to sustain the value of the currency.
The cedi would have dropped even further if Ghana had not stopped making payments on its foreign debt, according to Courage Boti, an economist with GCB Capital Ltd. in Accra. “Those are weak reserve levels that no one expects to support currency stability,” Boti said. “In addition, there is a significant risk of pressure on foreign exchange demand due to this year’s elections,” he stated. December is when the new president is supposed to be chosen.
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In December 2022, Ghana declared an end to its international commitments due to the aftermath of the Covid-19 outbreak and the shock to global markets caused by Russia’s invasion of Ukraine. It has finished revamping its domestic bonds and in January, it secured a preliminary agreement with bilateral lenders to restructure $5.4 billion.
Once the debt restructuring is finished, foreign investors may be more receptive to investments in Ghana; but, political risk in the run-up to the election will warrant ongoing caution, according to Boti.
The second-largest cocoa producer in the world depends on imports for almost everything, including heavy machinery and toothpicks, and these imports are predicted to rise in the lead-up to the election. The government forecasts faster GDP growth this year, at 2.8%, up from 2.3% in the previous year.
Rebuilding foreign reserves is one of the central bank’s policy goals under the IMF program, according to Databank Group analyst Kweku Arkoh-Koomson. He said, “This means Bank of Ghana will just smooth out volatility rather than necessarily intervene on the market as it should.”
According to Bloomberg statistics, it was virtually unchanged at 12.9267 per dollar at 10:41 a.m. in Accra, the capital.
Cedi is Africa’s third-worst performing currency this year – According Bloomberg reports
Cedi is Africa’s third-worst performing currency this year – According Bloomberg reports
Cedi is Africa’s third-worst performing currency this year – According Bloomberg reports
Cedi is Africa’s third-worst performing currency this year – According Bloomberg reports
