Ghana’s Cedi ranked as the world’s worst performing currency in 2022.
The Cedi has been reported by Bloomberg to be the world’s worst-performing currency this year as investors continued to squeeze foreign capital to the west African country before a deal with the International Monetary Fund.
The currency of the world’s second-biggest cocoa producer depreciated as much as 3.3% Monday, before paring the loss to 11.2750 per dollar at 3:30 p.m. in the capital Accra. That took its losses this year to more than 45%, the most among 148 currencies tracked by Bloomberg.
Since the beginning of the year, the cedi’s depreciation has accelerated. Ghana has been in formal negotiations with the International Monetary Fund for an extended credit facility for the past two months, with the intention of getting $3 billion in loans over three years.
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The IMF has been reluctant to grant Ghana’s request because it demands a debt sustainability plan before providing the country with the billion bailouts it has asked for.
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“Investors were expecting to hear something in Washington last week but unfortunately nothing emerged,” Simon Quijano-Evans, a London-based economist at Gemcorp Capital, said in an emailed comment, referring to the week-long IMF annual meetings that ended on October 16. “It was radio silence.”
The nation turned to the IMF for assistance after losing access to the Eurobond market this year and after domestic policies—including a 30% reduction in 2022 discretionary spending—failed to stop a selloff in its foreign bonds. Investor demand for holding Ghanaian debt has increased to 2,669 basis points over US Treasury bonds.
According to data from the Central Securities Depository Ghana, foreign investors’ holdings in domestically issued government and corporate bonds dropped to their lowest level ever at 12.3% at the end of August from a peak of 17.3% in April 2022.
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According to indexes monitored by Bloomberg, the average yield on the country’s domestic bonds is 41.9%, the highest among emerging markets.
At the end of September, Ghana’s gross international reserves fell to $6.6 billion, hardly enough to pay less than three months’ worth of imports. This is less than the $10.7 billion that covered imports for nearly five months a year earlier.
The unit of exchange has surpassed the losses of the Sri Lankan rupee, which has fallen about 45% against the US dollar this year as the nation also tries to get access to an IMF loan after a debt default.
Ghana is not the only nation having problems with its currency. For this reason, Kenya is also in the headlines.
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Ghana’s Cedi ranked as the world’s worst performing currency in 2022.
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