Ghana, the second largest cocoa producer in the world, bags the worst-performing currency against its global counterpart, the United States Dollar.
On Monday, the local currency lost 3.3% of its value against the United States Dollar before paring losses to 11.2750, according to a Bloomberg report. So far this year, the currency has lost over 45% of its value against the greenback, the highest among 148 currencies tracked by Bloomberg.
The currency decline spiked in the past month when Ghana commenced formal negotiations with the International Monetary Fund (IMF) for an extended credit facility. Ghana hopes to receive almost $3 billion in loans over three years under the arrangement to handle its finances and aid the balance payments.
Ghanian Cedis has now toppled Sri Lankan rupee’s almost 45% decline recorded against the United States dollar this year. Another emerging economy seeking credit relief from IMF.
Ghana had requested assistance from the IMF after losing access to the Eurobond market this year, while the country’s policies, which include slashing 2022 discretionary expenditure by 30% had failed to activate a sell-off in Ghana’s international bonds.
Meanwhile, premium investors’ request to the United State Treasuries to hold Ghana’s debt has expanded to 2,669 basis points. Holdings by foreign investors in outstanding domestic government and corporate bonds drops to 12.3% in August 2022, the lowest ever recorded from its increase of 17.3% recorded in April 2022.
This is according to the data received from Ghana’s Central Securities Depository.
The country’s gross international reserve dwindled to $6.6 billion in September 2022, which is just enough to cover almost three months of imports. This is below the $10.7 billion from 2021 which covered almost five months of imports.
According to Bloomberg, Ghana’s domestic bonds are the highest in emerging markets, currently trading at an average yield of 41.9%.
Last month, Investors king published the list of worst-performing currency in Africa, with the Ghanaian Cedis taking the fifth position after the Nigerian Naira.