Cedi falls to record low as foreign investors shun Ghana bonds
February 26, 2019
Ghana’s currency slumped to a record against the dollar after a dovish tilt by the nation’s central bank reduced the appeal of fixed-income assets, sapping foreign-investor demand for the country’s bonds.
The cedi has weakened 11 percent this year, the most among more than 140 currencies tracked by Bloomberg after the central bank unexpectedly cut its benchmark rate in January and signalled more easing may be in store.
Out of the GHc2.1 billion (US$393 million) of two-year and longer-dated maturities sold by the government through Jan. 31 this year, foreign investors bought just 6.3 percent, according to data from the Central Securities Depository Ghana Ltd. That compares with more than 30 percent in 2018.
“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,” Gaimin Nonyane, a senior macroeconomic specialist at Ecobank Group in London, said by phone.