With a year-to-date loss of 38.86% against the US dollar, the Ghana Cedi finished 2022 as the second-weakest currency on the African continent, according to Bloomberg.
The local currency came in 145th position overall. The Argentina Peso and Sierra Lankan Rupee were ranked 147th and 148th, respectively, while the Sierra Leone Leone rated 146th.
According to Bloomberg, they are the currencies having the “Worst Spot Returns.”
All of these nations faced economic difficulties because their debt loads had grown to unmanageable levels and their budget deficits had alarmingly widened.
In Africa, the Kenyan Shilling (-8.32%), The Gambian Dalasi (-15.28%), Malawian Kwacha (-20.51), New Sudanese Pound (-22.87%), Egyptian Pound (-36.46%), Ghana Cedi (-38.36%) and Sierra Leone Leone (-40.58%) were the currencies with the “Worst Spot Returns”.
For the “Best Spot Returns”, the Guinea Franc (7.67%), Somali Shilling (1.77%), Mozambique New Metical (0.37%), Djibouti Franc (-0.08%), Tanzania Shilling (-1.05%), Congolese Franc (-1.13%) and Rwanda Franc (-3.87%) were the strongest currencies in Africa in 2022.
The Ghana cedi under significant pressure in 2022, dropping almost 50% of its value at one point before recovering in December as a result of a staff-level agreement made between the International Monetary Fund and the Government of Ghana. This drastically cut its year-to-date losses.
Before then, the Domestic Exchange Program’s debut was announced by Finance Minister Ken Ofori-Atta.
Thus, by the end of 2022, the local currency was selling on the retail or foreign market, on average, at roughly 11.60 to the American “greenback.”
According to some observers, the cedi’s rebound in December 2022 was more the result of general uncertainty and speculative activity than it was genuinely supported.
They argued that the cedi should be more susceptible to depreciation than appreciation due to an inflation rate of more than 50%, several years of consecutively high budget deficits leading to debt distress, and a forex reserves cover of less than three months of import cover.
However, they countered that a stable cedi in 2023 will mostly depend on a support program from the IMF.
Cedi records 18.21% depreciation to dollar in quarter 1
The cedi recorded an 18.21% rate of depreciation to the US dollar in the first quarter of 2022, according to Bloomberg.
This ranked the local currency as the worst among African currencies with the “Worst Spot Returns”.
However, for the timely intervention by the Bank of Ghana, the situation could have been worse.
Cedi loses 16.86% value to dollar in first half-year of 2022
In the first-half of 2022, the Ghana cedi lost 16.86% in value to the US dollar on the interbank market but over 20% in the retail forex market.
However, the rate of depreciation of the cedi slowed down in the last two months (May and June 2022), after stern monetary actions from the Bank of Ghana coupled with some fiscal measures to halt the free fall in the first four months of 2022.
Cedi loses 40% value to dollar in nine months of 2022; places 147th position in world – Bloomberg
In the first nine months of 2022, the Ghana cedi lost 40.05% in value to the US dollar, ranking it as the second worst performing currency in the world in the 147th position, according to Bloomberg.
This decline in the local currency against the American currency was the worst in over three decades.
There was a free fall of the cedi in the months of August 2022 and September 2022.