World’s worst-performing currencies: Ghana’s cedi, as Nigeria’s naira, SA’s rand also struggle

Ghana’s cedi slumped over the last three days to become the world’s worst-performing currency this year as investors continued to squeeze foreign capital into the West African country.
The currency of the world’s second-biggest cocoa producer depreciated as much as 3.3%, which took its losses this year to more than 45%, the most among 148 currencies tracked by Bloomberg. The decline of Ghana’s currency has accelerated since the beginning of the year. The West African country has for the past two months been in formal negotiations with the International Monetary Fund (IMF) for an extended credit facility with the hope of receiving $3bn in loans over three years. The IMF has been slow to yield to Ghana’s request as they require a debt sustainability plan, before lending the country its requested billion bailouts.
The country sought help from the IMF after losing access to the Eurobond market this year and as homegrown policies, including cutting 2022 discretionary expenditure by up to 30%, failed to stem a selloff in its international bonds. Holdings by foreign investors in outstanding domestic government and corporate bonds fell to 12.3% at the end of August, the lowest ever, from a 2022 peak of 17.3% in April, according to Central Securities Depository Ghana data. Ghana’s gross international reserves declined to $6.6bn in end-September, enough to cover only just under three months of imports. That’s down from $10.7bn a year earlier, which gave nearly five months of import cover. Cedi has thus overtaken the losses of the Sri Lankan rupee, which has slid nearly 45% against the greenback this year. Apart from the Ghanaian cedi, other African currencies that have depreciated rapidly against the greenback in recent months include Nigeria’s naira and South Africa’s rand.