The cedi has continued to be volatile against major trading currencies, despite recent gains, as Ghana awaits a deal with the International Monetary Fund (IMF) later this quarter.
According to GCB Capital's weekly market update, the local currency appreciated against the US dollar, the euro, and the British pound over the past week, gaining 3.2% against the US dollar on the retail market. However, GCB Capital warned that the cedi remains sensitive to news and uncertain developments, stating, “The prevailing uncertainty and external monetary policy developments could keep the local currency volatile until an IMF board-level approval.”
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Ghana has been working to stabilize its financial situation in order to secure a US$3 billion bailout from the IMF. This has involved a domestic debt exchange programme (DDEP) launched in December, in which investors in cedi debts are asked to swap their existing holdings for new ones with a maximum maturity of five years.
Although the offer is optional, the government has revised the terms of the debt swap multiple times in response to protests from business associations and individual bondholders.
In a recent statement, the government described the debt swap as “an urgent necessity to make the country's debt sustainable,” which is a requirement for securing the US$3 billion bailout from the IMF. An IMF staff-level agreement was received in December.
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