After President Nana Akufo-Addo declared that bondholders wouldn’t incur losses as part of any IMF bailout, the Cedi had a significant recovery versus the dollar, rising to 13 from 14.05 at last week’s closing price.
A Bank of Ghana crackdown on unlicensed FX dealers helped the recovery. As importers try to pay for items in time for the holiday shopping season, there is still a strong demand for the dollar in the lead-up to Christmas. We anticipate that the currency’s rebound will be fleeting, with the Cedi likely to return to its previous levels of 14 in the near future due to high levels of debt and growing inflation.
African leaders’ two top concerns at COP27
The leaders of the continent have two main goals at the UN’s COP27 climate conference next week, despite Africa producing only about 3% of the world’s emissions and being severely affected by extreme weather, such as the recent floods that displaced millions and destroyed farmland throughout west Africa.
The first is that developed countries should make up for the harm that climate change is causing to Africa by paying compensation, with the money going toward developing infrastructure that will be more resistant to harsh weather and promoting the switch to renewable energy sources.
The second goal is to create a compromise between requests for a global halt to new fossil fuel projects and the needs for new oil and gas supplies to meet energy constraints in Europe as well as the priorities of economic development in Africa. The economies and currencies of Africa may benefit if one of these major goals advances.