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Ghana's currency hit a record high against the dollar after easing off from the country's central bank, which reduced the attractiveness of fixed income badets, undermining foreign investors' demand for bonds from the country.
The cedi has weakened by 11% this year, the most among more than 140 currencies followed by Bloomberg, after the central bank unexpectedly lowered its key rate in January and announced further easing.
Of the 2.1 billion cedis ($ 393 million) of two-year and longer-term maturities sold by the government until January 31 of this year, foreign investors did not bought only 6.3%, according to Central Securities Depository Ghana Ltd. data. with more than 30% in 2018.
"The decrease in capital inflows resulting from the country's foreign demand for Cedi bonds, coupled with the lack of maturities on maturities, will ultimately affect the foreign exchange supply on the country. market ", said Gaimin Nonyane, Macroeconomic Specialist of the Ecobank Group in London. Companies that accumulated dollars before transferring their profits in March also weighed on the cedi, she said.
The Cedi fell 0.4% to 11.52 to reach 5.5175 to the dollar in Accra, the capital, reaching the lowest level since Bloomberg began to set records in 1994. The currency fell by 3.1% Thursday and 4.9% this week.
A member of the Monetary Policy Committee of the Bank of Ghana said this month that rates could be further eased as early as March, following a 100 basis point cut to 16 percent on 28 January.
A planned sale of Eurobonds can support the currency because the central bank uses the proceeds of the sale to replenish its foreign exchange reserves.
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