World Bank Marks The Cedi As The Worst Performing Currency In Africa
The Ghana cedi has been ranked as the worst-performing currency in Africa, according to the World Bank Africa Pulse Report October 2022 Volume.
The report indicates that since the beginning of the year, the CCedi has performed abysmally, depreciating over 60 per cent against the United States dollar.
It said although inflation in the region was trending upward before Russia’s invasion of Ukraine, factors including the depreciation of currencies against the dollar and increased commodity prices had contributed to inflationary pressures.
It noted that it was imperative to tame inflationary pressures in African states. Otherwise, inflation could lead to social unrest, intensify conflict, and ultimately ignite political instability.
“Inflation in the region was trending upward before Russia’s invasion of Ukraine amid supply chain disruptions caused by restrictions to avoid escalation of COVID-19 cases and the economic fallout from the pandemic”.
“Commodity prices, particularly food and oil prices, rose from a rebound in global demand, and oil prices rose from an OPEC+ agreement to cut production,” it said.
“These effects were amplified by the war in Ukraine. Food and fuel prices, as well as the depreciation of domestic currencies, are the dominant factors underpinning inflationary pressures in the region,” it added.
Ghana came top with a depreciation of 60 per cent, followed by South Sudan (50.8 per cent), Sudan with 28.6 percent ranked third, Malawi 25.4 per cent came fourth, and CFA Franc came 5th with 13.3 per cent.
Background
In August 2022, the Ghana Cedi was identified as the worst-performing currency worldwide in a currency ranking done by Bloomberg.
The Ghanaian legal tender was placed last among 150 currencies in the world, tracked by their performance since the beginning of the year.
The Sri Lankan rupee came second to the Cedi in the ranking.
For more than seven months, the Cedi has come under intense exchange rate pressure due to its continuous depreciation to major international currencies such as the Dollar, Pound and Euro.
According to data from the Bank of Ghana (BoG), the Cedi began the year at $1.00 to GH¢6.02.
Around June, one could exchange $1.00 for GH¢7.43; in less than 20 days, traders needed an average of GH¢9.37 to buy $1.00.
The BoG convened an emergency Monetary Policy Committee (MPC) meeting on 17 August 2022 over the Ghanaian economy’s challenges.
According to the apex bank, the meeting reviewed developments on dealing with the sharp depreciation of the Cedi and the rising inflation.
According to the apex bank, the meeting will also review economic developments over the past month.
The Monetary Policy Committee was initially scheduled to hold its next meeting from 20 September to 23rd 2022.
“The Monetary Policy Committee (MPC) of the Bank of Ghana will hold an emergency meeting on Wednesday, 17 August 2022, to review recent developments in the economy. The meeting will conclude with an announcement of the decisions of the committee,” a statement from the central bank announced.
MPC meetings are mainly attended by officials of the Bank of Ghana, some banking consultants and economists.
The central bank is the second in sub-Saharan Africa after the Bank of Uganda held an emergency meeting since Russia’s war with Ukraine erupted in February.