These currencies have fallen in value this year – and one is down more than 75% against the dollar
Zimbabweans line up to withdraw money from a bank on June 21, 2008 in Bulawayo, Zimbabwe. Sky-high inflation continues to affect the Zimbabwean economy.
John Moore | Getty Images News | beautiful pictures
The forex market went through a bumpy ride in 2022, but in some Nationa combination of political geography pressure and central bank missteps It’s really amazing currency into a “death spiral.”
A stronger dollar throughout the year, as investors flocked to traditional “safe havens” amid geopolitical and macroeconomic shocks, weighed heavily on many. Emerging Markets currency.
Major oil producers and countries whose central banks have unequivocally raised interest rates are generally doing better.
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Steve Hanke, professor of applied economics at Johns Hopkins University, publishes a regular list of the year’s worst performing currencies — and Ghana’s. cedi near the top.
The cedi hit a new record low against the dollar last Wednesday, hitting 14.24 at one point before recovering slightly. According to Refinitiv data, it started the year trading at just over 6 cedis against the dollar, meaning the greenback has strengthened over 132% against the West African nation’s currency.
Ghana’s problems including rising costs of living and an unsustainable debt burden have forced the government to turn to the International Monetary Fund for support, a move shared by both the ruling party and the opposition. mean in an unusual way.
Jacques Nel, head of macro at Oxford Economics Africa, said: “The depth of Ghana’s troubles is even clearer considering that government officials are willing to take big pay cuts in efforts to free up some funding.” .
“However, this financial sacrifice by government officials should not be confused with the unity of the country’s leaders, with the opposition blatantly waiting for the IMF deal to be ratified first. when he opened fire to run for President [Nana] Akufo-Addo’s Scalp. “
The latest shock to the coin came as the Bank of Ghana canceled a scheduled foreign exchange auction and protests were held in the capital Accra this month demanding the resignation of President.
Murega Mungai, head of trading at Nairobi-based AZA Finance, explains: “The bank has taken a series of measures to prevent a year-long spiral of currencies, including reassurance. unsuccessful pressure on unlicensed currency sellers.”
“It has also bought dollars directly from miners to bolster its reserves, leaving the market with much-needed liquidity. Against that backdrop, we expect the Cedi to continue to come under pressure. strength in the near term, may weaken beyond 14.50.”
Hanke said on Twitter last week that the cedi is a “central bank junk currency” and suggested the country must “obfuscate its central bank and install a currency board” to restore order. on one’s own.
Zimbabwe, Cuba
However, the decline of the cedi makes it the third worst performing currency in the world this year.
In second place is the Cuban peso, down 56.36% against the dollar, just behind the Zimbabwean dollar, which has lost a staggering 76.74% against the dollar since January. Both Zimbabwe and Cuba are suffering from terrible inflation.
Hanke said last week that “Zimbabwe’s deadly economic spiral keeps spinning.” National statistics agency ZimStat reports that the country’s inflation hit 268% annually in October, but Hanke’s own estimate puts it at 417%. Similar to Ghana, authorities in Zimbabwe have tried to support the local currency and fight inflation by restricting payments in Zimbabwean dollars.
Sky-high inflation is also a central issue in Cuba, with Hanke’s model placing consumer price growth at 166% annually.
Egypt
The Egyptian pound last week fell to a new low against the dollar, sliding to 24.42, making it into Hanke’s list of 10 worst performing currencies of 2022.
Fitch Ratings recently downgraded the country’s credit outlook to negative, citing a deteriorating external liquidity position and diminished exposure to the bond market. Meanwhile, Egypt’s foreign exchange reserves have been depleted to less than $32 billion in October from $35 billion in March.
Fitch emphasized that Egypt’s financial problems are worsening with $6 billion in foreign debt due next year and another $9 billion due in 2024.
“Despite a flurry of financial deals announced at COP27 in Sharm el-Sheikh this week, the continued foreign retreat overall is likely to cause [Egyptian] The pound will weaken further against the dollar in the coming days,” AZA financial trader Mitch Diedrick said in a research note on Thursday.
Other currencies on the list as of last week include Sri Lankan Rupees, Venezuelan BolivarLeone of Sierra Leone, Kyat MyanmarLao Kip and Ukrainian hryvnia.
