The Ghana cedi, along with three other currencies, has been identified as one of the worst performers in Sub-Saharan Africa (SSA) for 2024, according to the World Bank’s October 2024 Africa Pulse Report. The cedi has depreciated by approximately 24% against the US dollar, ranking it as the fourth weakest currency in the region.
Leading the list of underperformers are South Sudan’s pound, which has plummeted by over 60%, Ethiopia’s birr with a decline of 51%, and Nigeria’s naira, which has also fallen by more than 40%. These steep drops highlight the economic challenges facing these nations.
In contrast, the Kenyan shilling stands out as the best-performing currency in Africa this year, boasting a year-to-date appreciation of around 21% as of August 2024. This significant gain underscores the relative stability of Kenya’s economy in comparison to its neighbors.
The report highlights a troubling trend: “Ethiopia, Ghana, and Nigeria are among the worst performers in Africa this year, with their currencies continuing to weaken amid pressing demand for foreign exchange.” This situation poses significant challenges for businesses and consumers in these countries, as the weakening currencies can lead to increased inflation and economic instability.
It added “By end-August 2024, the Ethiopian birr, Nigerian naira, and South Sudanese pound were among the worst performers in the region. The Nigerian naira continued losing value, with a year-to-date depreciation of about 43% as of the end of August. Surges in demand for US dollars in the parallel market, driven by financial institutions, money managers, and non-financial end-users, combined with limited dollar inflows and slow foreign exchange disbursements to currency exchange bureaus by the central bank explain the weakening of the naira”.
In contrast, the report said some currencies that weakened in 2023 have stabilised or strengthened this year.
“The Kenyan shilling is the best-performing currency in Sub-Saharan Africa this year: it appreciated by 21 per cent year-to-date by end-August 2024. The South African rand and currencies pegged to it have strengthened by 3.1% so far this year, after losing value in the past year”.
Although most currencies are stabilizing, the October 2024 Africa Pulse Report pointed out that the exchange rate pressures and shortages of foreign exchange remain a concern for African policymakers.
“From a sample of 30 countries and two currency unions (the Economic and Monetary Community of Central Africa and WAEMU), more than one-third of the countries in the region are set to have less than three months of imports in international reserves by end-2024”.
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