The Ghana Cedi has depreciated to a record low after the local currency weakened 11 percent this year.
Bloomberg reports that a dovish tilt by the Bank of Ghana (BoG) has reduced the appeal of fixed-income asset and sapped foreign-investor demand for the country’s bonds.
Over the past few weeks, the cedi has gone past the ¢5 mark following high demand of the dollar by businesses.
Currently, the cedi has declined 0.4% to 5.5175 per dollar, which is its weakest level since Bloomberg started keeping the records in 1994.
The country’s economy came under scrutiny following complaints by a section of the public on the fast depreciation of the cedi against the US dollar.
At the start of September 2018, the currency was trading at close to 5 cedis to a dollar and more than 5 cedis on the black market.
However, the currency slightly appreciated against the US dollar towards the end of 2018.
According to data from the Central Securities Depository Ghana Ltd., out of the 2.1 billion cedis ($393 million) of two-year and longer-dated maturities sold by the government through January 31, 2019, foreign investors bought just 6.3%.
“Declining capital inflows from offshore demand for the country’s cedi bonds, coupled with maturities not being rolled over, will affect foreign-exchange supply on the market going forward,” a senior macroeconomic specialist at Ecobank Group in London, Gaimin Nonyane, is quoted as saying.
She added that companies stocking up on dollars before transferring earnings in March also weighed on the cedi.
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