Pedestrians walk in front of Ghana's central bank building in Accra, Ghana, on November 16, 2015. File Photo / Reuters
Accra: Ghana’s cedi extended the world’s biggest loss against the dollar this year amid uncertainty that possible debt restructuring could affect domestic bondholders.
The currency depreciated as much as 9.6% on Thursday, heading for its biggest decline in 22 years. That took losses in 2022 to nearly 52%, the worst performance among 148 currencies tracked by Bloomberg.
Ghana formed a committee this month to hold talks with domestic bond investors to collect views for a debt management strategy that would guide negotiations with the International Monetary Fund. The country is hoping to receive as much as $3bn under an IMF extended credit facility program to bolster its finances and regain access to global capital markets.
The IMF said on Thursday that its discussions with Ghanaian authorities have been "fruitful” and that a follow-up mission to the West African nation would happen "expeditiously” with the goal of reaching an agreement as soon as possible.
Demand for the greenback in the second-largest cocoa producer was also spurred by importers looking to stock goods before Christmas. The cedi traded down to 13.1072 per dollar at 4.55 p.m. in Accra.
"There are local investors who now want to invest in the foreign currency rather than hold cedi bonds because we don’t have any communication concerning how the restructuring will go,” said Gabriel Engmann, a currency trader at Accra-based GCB Bank Ltd., the country’s biggest domestic lender. "So people now discount their bills just to buy foreign currency and hold on to it.”
The Bank of Ghana created a special foreign-exchange auction earlier this year to provide cheaper dollars to oil and gas importers. That’s been a helpful move, said Engmann, but these companies are still showing a "huge” demand on the general market.
