This week, Ghana’s currency outperformed all others versus the dollar, fueling hopes that the indebted nation would soon be able to access a rescue from the International Monetary Fund.
According to Charles Robertson, the global chief economist of Renaissance Capital Ltd. in London, “the currency was the lowest in Africa, more than 30% undervalued compared to its 25-year history last week, so some return after the enormous decline recently isn’t that remarkable.” Additionally, the IMF is here, which ought to facilitate dollar support.
Gains occurred even as holders of the African country’s dollar-denominated sovereign bonds braced for capital losses and its local-currency sovereign bonds entered what Fitch Ratings described as a “default-like process.” In order to get a $3 billion IMF loan and put Ghana’s debt on a manageable course, the restructuring is required.
In the midst of the dollar’s largest quarterly loss since 2010, investors are returning to some of the riskiest regions of developing economies. They are wagering that the dollar will continue to suffer in the coming months as a result of the Federal Reserve’s transition to a less aggressive monetary policy.
On a closing basis, the cedi increased Friday to 12.9648 per dollar, the highest level since October. This year, it is still down 52%.