According to Renowned world financial news, research and data organisation Bloomberg, the Ghana’s cedi has been ranked the world’s best-performing currency against the dollar this year 2020, extended its advance on Monday as investors await a Eurobond sale that might bolster the government’s coffers.
Ghana, the second world biggest cocoa producer has strengthened 3.9% in 2020 among quite 140 currencies, a turnaround from last year, when it weakened by 13%.
This is following the coronavirus outbreak and the recent lunar New Year holiday in China that cropped travel and trade, reducing demand for foreign currency from Ghanaian importers.
According to Nana Yaa Faakye, Head of Treasury at Republic Bank Ghana Ltd. The West African country is concluding a series of meetings with international bond investors Monday for a purchase of the maximum amount as $3 billion in Eurobonds
“With the approaching Eurobond issuance, which is probably going to extend foreign reserves, some buyers are betting that the cedi will strengthen further,” Faakye said.
The central bank’s tight monetary stance is additionally supporting the currency, said Steve Opata, head of monetary markets at the Bank of Ghana.
Market reforms including the introduction of forward-rate exchange auctions since October, with a target of $715 million this year, are another think about favor of cedi gains, he said.
“The country’s high nominal interest rates interest investors because it will give them some immunity when the currency depreciates,” Stephen Bailey-Smith, an investment strategist at Kolding, Denmark-based Global Evolution, said by phone. “We have obviously seen some guys come into the market.”