These currencies have fallen this year - and one is down more than 75% against the dollar

These currencies have fallen this year – and one is down more than 75% against the dollar

Zimbabweans queue to withdraw cash from a bank on June 21, 2008 in Bulawayo, Zimbabwe. Skyrocketing inflation continues to plague the Zimbabwean economy.

John Moore | Getty Images News | Getty Images

Currency markets have had a tough time in 2022, but in some countries a combination of geopolitical pressures and central bank missteps have pushed currencies into a “death spiral”.

A stronger dollar during the year, as investors flocked to the traditional “safe haven” amid the deluge of geopolitical and macroeconomic shocks, weighed heavily on many emerging market currencies.

Major oil producers and countries with central banks that have raised interest rates decisively generally fare better.


Steve Hanke, professor of applied economics at Johns Hopkins University, publishes a regular list of the worst performing currencies of the year – and the Ghana cedi is near the top.

The cedi hit a new all-time low against the dollar on Wednesday last week, at one point hitting 14.24 before recovering slightly. It started the year trading at just over 6 cedis to the dollar, according to data from Refinitiv, meaning the greenback has strengthened by more than 132% against the nation’s currency. West African.

Ghana’s problems include the rising cost of living and an unsustainable debt burden that has forced the government to turn to the International Monetary Fund for help, a move uncharacteristically accepted by ruling parties and the opposition.

“The depth of Ghana’s problems is even more striking when you consider that government officials are prepared to accept a massive wage cut in an effort to free up funds,” said Jacques Nel, head of macro at Oxford Economics. Africa, in a recent note. .

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“However, this financial sacrifice by government officials should not be confused with unity among the country’s leaders, with the opposition blatantly waiting for the IMF deal to be approved before targeting the president. [Nana] Akufo-Addo’s scalp.”

The latest currency shock came when the Bank of Ghana canceled a planned currency auction and protests took place in the capital Accra this month demanding the president’s resignation.

“The Bank has taken a series of measures to stem the currency spiral that has lasted for a year, including an unsuccessful crackdown on unlicensed currency sellers,” explained Murega Mungai, head of trading desk at AZA Finance, based in Nairobi.

“It also bought dollars directly from mining companies to shore up its reserves, depriving the market of much-needed liquidity. Against this backdrop, we expect the Cedi to remain under pressure in the near term, possibly weakening beyond from the level of 14.50.”

Hanke said on Twitter last week that the cedi was a “junk central bank currency” and suggested the country should “mothball its central bank and install a currency board” in order to restore order.

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Zimbabwe, Cuba

However, the cedi’s decline only makes it the world’s third worst performing currency this year.

The Cuban peso is in second place, down 56.36% against the dollar, behind the Zimbabwean dollar, which has lost 76.74% of its value against the dollar since January. Zimbabwe and Cuba both suffer from exorbitant levels of inflation.

A man holds Zimbabwe dollar bond notes

Dan Kitwood | Getty Images News | Getty Images

Hanke said last week that “Zimbabwe’s economic death spiral continues to turn”. National statistics agency ZimStat reported that the country’s inflation hit an annual rate of 268% in October, but Hanke’s own estimates put it at 417%. As in Ghana, authorities in Zimbabwe have tried to prop up the local currency and fight inflation by clamping down on payments in Zimbabwean dollars.

Skyrocketing inflation is also a central problem in Cuba, with Hanke’s model placing consumer price increases at 166% per year.


The Egyptian pound fell last week to a new low against the dollar, slipping to 24.42, making its way onto Hanke’s list of the 10 worst performing currencies of 2022.

Emerging market stocks are

Fitch Ratings recently downgraded the country’s credit outlook to negative, citing a deterioration in the external liquidity position and the risk of reduced access to the bond market. Meanwhile, Egypt’s foreign exchange reserves had shrunk to less than $32 billion in October from $35 billion in March.

Fitch pointed out that Egypt’s financing problems were exacerbated by $6 billion in external debt maturities coming next year and another $9 billion in maturities in 2024.

“Despite a wavering of funding agreements announced at COP27 in Sharm el-Sheikh this week, continued foreign outflows are likely to cause the [Egyptian] The pound is expected to weaken further against the dollar in the coming days,” AZA Finance trader Mitch Diedrick said in a research note on Thursday.

Other currencies on the list since last week include the Sri Lankan Rupee, venezuelan bolivarthe Leone from Sierra Leone, the Kyat from Myanmar, the Lao Kip and the Ukrainian Hryvnia.

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