Few days after the government launched a debt exchange program, the value of the local currency (cedi) continues to rise against the US dollar and all other major foreign currencies.
Joy Business checks at certain foreign bureaus in Accra’s capital city indicated that the local currency is trading at an average of ¢13 to the US dollar. If the current trend continues, it might fall below the¢ 12 range by tomorrow.
A pound and a euro are also selling for ¢15.90 and ¢13.15 cedis, respectively.
It is unclear why the local currency has suddenly improved, although some market analysts attribute it to a weakness of the US dollar versus global currencies and the successful commencement of a debt restructuring program.
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The administration expects to win an IMF Staff-Level Agreement before the end of the year, which will boost investor confidence and strengthen the cedi even more.
A day after the Debt Exchange Programme was launched, several analysts predicted that the Ghana cedi would increase versus the US dollar and other major foreign currencies as the prognosis for Ghana’s debt sustainability improved.
The cedi’s recent rally represents more of a US dollar drop, with a better prognosis for the cedi-US dollar supply balance moving into next year, according to an analyst with a major investment bank.
“Firstly, we’ve seen some sharp weakening of the US dollar against global currencies in recent weeks and this is showing in a sharp decline in the dollar index which has lost 6.6% since early November to date. The US dollar weakening has thus eased the pressure on emerging and frontier market currencies, including the Ghana cedi”.
Another expert stated that the debt restructuring negotiations appear to be a positive outlook for the cedi.
“If the domestic debt exchange programme becomes successful with almost 100% participation, what it means is that the amount of cedi supply in the form of interest and principal payments will reduce and this should reduce the imbalance in the forex market. The outlook for a tighter cedi liquidity is being priced into the market, supporting the local currency, he said”.
The cedi is gaining value versus the dollar, with one dollar being worth ¢13.70 cedis.
On Tuesday, December 6, 2022, the local currency was worth 13.70 US dollars.
This occurred shortly following the launch of the Debt Exchange Programme on Monday, December 5, 2022.
SOURCE: myjoyonline
