Ghana Cedi Is The Best Performing Currency In The World – Bloomberg
The Ghana Cedi has been identified as the best-performing currency worldwide following the country’s impending International Monitory Fund (IMF) bailout.
The Ghana Cedi has outperformed all other global currencies against the US dollar over the past six months, bolstered by investor confidence in the country’s potential approval for a US$3 billion bailout from the International Monetary Fund (IMF).
According to Bloomberg’s currency tracker, the Cedi’s remarkable 33% gain since November marks the highest among approximately 150 tracked currencies.
Bloomberg indicated the Cedi strengthened by 5.3% on May 15, 2023, the most since April 3, 2023.
It actually gained 5.0 pesewas to the dollar on the retail market to sell at ¢11.90 on May 15, 2023.
Investors have also enjoyed strong returns from Ghana’s dollar bonds, delivering nearly 12%, surpassing the 3.6% average for emerging and frontier markets in a Bloomberg index.
Reports have indicated optimism about the forthcoming IMF board meeting, stating that the initial US$600 million tranche is expected immediately upon approval.
Subsequently, another US$600 million will follow in November, with the remaining funds disbursed in equal portions of US$350 million every six months, subject to IMF reviews.
The positive sentiment surrounding the potential bailout has contributed to the Cedi’s recent strengthening, with the expectation that it may trade below GH10 against the US dollar.
Meanwhile, all is set for the Executive Board of the International Monetary Fund (IMF) to consider Ghana’s Programme with indications that the country will secure approval.
This will pave the way for the disbursement of the first tranche of the $3 billion balance of payment support to Ghana shortly.
The anticipated funds will assist in replenishing Ghana’s foreign-exchange reserves, which have declined by almost 50% since their peak in August 2021.
This decline was primarily due to the central bank utilizing reserves to alleviate pressure on the Cedi following the country’s debt default.
Ghana is utilizing the Group of 20’s Common Framework to restructure its debt to secure the IMF program.
This framework aims to enhance coordination between traditional sovereign creditors like the Paris Club and newer creditors such as China, the largest lender to emerging economies.
Other countries, including Zambia and Ethiopia, also leverage this framework to address their debt challenges.
The board is undertaking this exercise after the country met all the pre-conditions and obtained financing assurance from members of the G20 Common Framework.
The Cedi and Ghana’s Eurobonds have already extended gains on the international market.