Ghana’s Cedi Rebounds as Debt Suspension Eases Dollar Demand

Ghana’s embattled cedi has rebounded 5% against the dollar in March as the government’s decision to suspend external debt payments eased demand for greenbacks in the local foreign exchange market, Bloomberg News reported. The west African nation unilaterally stopped payments on eurobonds and other external debt in December, pending an agreement with creditors that is needed to unlock an International Monetary Fund bailout. Traders said the impact is beginning to filter through to the currency, after it lost ground in the first two months of the year. Stopping debt servicing means Ghana will not have to pay $516 million in Eurobond coupons over the first half of this year, according to Samuel Parker-Longdon, a trader at Fidelity Bank Ltd. in Accra. This “eased the pressure on forex reserves,” Parker-Longdon said. “There is also a bias toward a stronger currency as markets see an IMF deal in reach.” Ghana is trying to restructure most of its public debt, estimated at 575.7 billion cedis ($46.8 billion) at the end of November, to IMF board approval for a $3 billion program. It has completed the first part of a domestic debt swap, and in another positive sign, authorities said early this month that initial bilateral talks with China were“progressing well.” Read more.