Ghana’s cedi currency failed to hold onto its early gains on Tuesday, even after the much-anticipated $360 million loan from the International Monetary Fund (IMF) arrived in the Bank of Ghana’s (BoG) account.
The cedi had seen some improvement on Monday, reaching levels between GH¢15.30 and GH¢15.45 cedis to the dollar. However, by Tuesday morning, it had slipped back to its previous week’s range of GH¢15.45 to GH¢15.55 cedis.
Market analysts attributed the initial gain to reduced demand for dollars. Currency traders had expected the IMF loan approval to bring down the dollar rate. However, this sentiment shifted on Tuesday.
According to market watchers, despite Monday’s performance, many traders remained unconvinced that the IMF funds would significantly impact the cedi’s depreciation. They pointed to a continued strong demand for dollars as evidence.
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It remains unclear whether the BoG will intervene by injecting more foreign exchange into the market following the IMF loan. Alternatively, they may choose to let supply and demand dictate the cedi’s direction.
Meanwhile, Ghana is moving forward with a eurobond exchange program this month. This follows an agreement in principle with private creditors to restructure $13 billion in debt.
Finance Minister Mohammed Amin Adam stated that July will see the launch of a consent solicitation and exchange memorandum aimed at international capital markets. The programme is expected to conclude by September.
A key step in the debt restructuring process involves the official creditor committee assessing whether the deal meets the “comparability of treatment” principle. This principle ensures a fair distribution of debt losses between bond investors and lenders from various countries (bilateral lenders).
Approval from bilateral lenders is crucial for finalizing talks with bondholders and issuing new debt instruments to replace the existing dollar bonds.
Ghana’s eurobonds continued to lose value on Monday. Dollar bonds maturing in 2032 fell for the sixth consecutive day, dropping 0.3 cents to 51.16 cents on the dollar. Bonds maturing in 2034 also experienced losses, reaching their lowest point in over a month at 51.1 cents on the dollar, according to Bloomberg.
