Source: newsthemegh.com
After Ghana’s $3 billion agreement with the International Monetary Fund (IMF) provided investors faith that it can recover from last year’s debt crisis, the Cedi is set for one of the greatest rallies globally.
Prior to the IMF agreement, which was finalized in the middle of the month, the cedi displayed the strongest performance globally against the dollar. That was the most recent of several abrupt fluctuations that have occurred since Ghana abruptly stopped making payments on the majority of its external debt in December.
The currency is expected to conclude the month up 5.3%, which would be the fourth-largest gain among the roughly 150 currencies Bloomberg monitors.
Now, it is hoped that the IMF program will assist the country in strengthening its finances and moving closer to restoring access to international markets.
The agreement, which calls for a $600 million prompt payment, was approved after the nation finished the first phase of a domestic debt exchange scheme.
Courage Boti, an economist with GCB Capital in Accra, stated, “I see the cedi regaining stability with a predictable trajectory.” The gains may also begin to level down following the first surge this month, he added.
Dollar-denominated securities in the country also beat their peers in May, giving investors a return of 7.2% versus an average loss of 0.8% for peers in emerging and frontier markets in a Bloomberg index.
According to Samir Gadio, head of Africa Strategy at Standard Chartered Bank, “multilateral support should help stabilize FX reserves and the authorities have committed to ending Bank of Ghana financing of the government deficit.” In the upcoming months, this might support the cedi’s stance.