The recent depreciation of the Ghana cedi against major foreign currencies is expected to continue as foreign exchange liquidity remains limited.
Last week, the cedi weakened against key trading currencies as foreign exchange availability remained constrained.
Adding to market concerns, the Ghana Cocoa Board’s decision to potentially forgo its annual cocoa syndication loan has heightened uncertainty about the cedi’s near-term stability.
Analysts also suggest that the recent Eurobond coupon payments by the government may have increased demand for foreign exchange funded by cedis, further contributing to the currency’s decline.
During the past week, the cedi depreciated by 0.31% against the dollar, 1.82% against the pound, and 3.76% against the euro on the retail market. On August 26, 2024, the cedi traded at GH¢16.28 to the dollar, bringing its year-to-date loss to 24.57%.
Meanwhile, Ghana is set to begin a 10-day Eurobond debt exchange this week, aiming to finalize the restructuring of its $13 billion Eurobond debt.
According to Bloomberg, the exchange will allow investors to swap their existing bonds for two new options: DISCO and PAR.
The DISCO option offers investors a haircut of up to 37%, with two new bonds maturing in July 2029 and 2035 at a 5% interest rate. The PAR option, on the other hand, provides a 1.5% interest rate on new bonds maturing in January 2037 without any haircut.
Analysts anticipate that market uncertainties may ease following a successful exchange, which could alleviate some pressure on the cedi.