These currencies have plummeted this year and one has fallen more than 75% against the dollar

Zimbabweans line up to withdraw money from a bank on June 21, 2008 in Bulawayo, Zimbabwe. Skyrocketing inflation continues to affect Zimbabwe’s economy.

John Moore | Getty Images News | Getty Images

Foreign exchange markets took a rocky run in 2022, but in some countries, a combination of geopolitical pressures and central bank missteps pushed currencies into a “death spiral”.

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

Major oil producers and countries with central banks that have sharply raised interest rates are generally doing better.


Steve Hanke, a professor of applied economics at Johns Hopkins University, regularly publishes a list of the worst-performing currencies of the year, and Ghana’s cedi is close to the top.

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

Ghana’s problems include rising cost of living and an unsustainable debt burden that have forced the government to turn to the International Monetary Fund for assistance, a move unusually agreed upon by both the ruling party and the opposition.

“The depth of Ghana’s problems is made even more evident when you consider that government officials are willing to take a massive pay cut in an effort to free up some funding,” Jacques Nel, Oxford’s macro manager, said in a recent statement. Economics Africa.

“However, this financial sacrifice on the part of government officials is not to be mistaken for unity among the country’s leaders, with the opposition brazenly awaiting approval of the IMF deal before firing on the presidency. [Nana] Akufo-Addo’s scalp. ”

The latest shock to the currency came when the Bank of Ghana canceled a scheduled foreign currency auction and protests were held in the capital Accra this month to demand the resignation of the president.

“The Bank has taken a number of measures to stem the currency’s annual spiral, including an unsuccessful crackdown on unlicensed currency sellers,” explained Murega Mungai, head of the trading desk at Nairobi-based AZA Finance.

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

Hanke said on Twitter last week that cedi is a “central bank junk currency” and suggested the country must “take its central bank out of service and install a currency board” to restore order.

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Zimbabwe, Cuba

However, the decline in the cedi makes it only the third worst-performing currency worldwide this year.

In second place is the Cuban peso, down 56.36% against the dollar, behind only the Zimbabwean dollar, which has lost a staggering 76.74% of its value against the dollar since January. Both Zimbabwe and Cuba are suffering from mouth-watering levels of inflation.

A man holds Zimbabwean dollar banknotes

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 268% annually in October, but Hanke’s estimates place it at 417%. Similar to Ghana, Zimbabwean authorities attempted to support the local currency and fight inflation by cracking down on Zimbabwean dollar payments.

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


The Egyptian pound plunged to a new low against the dollar last week, slipping to 24.42, entering Hanke’s list of the top 10 worst-performing currencies of 2022.

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

Fitch pointed out that Egypt’s funding problems would be exacerbated by $ 6 billion in impending external debt maturities next year and another $ 9 billion in maturities in 2024.

“Despite a series of financial deals announced at COP27 in Sharm el-Sheikh this week, continued exits from abroad in general are likely to cause the [Egyptian] The pound will weaken further against the dollar in the coming days, ”AZA Finance trader Mitch Diedrick said in a research note Thursday.

Other currencies featured on last week’s list include the Sri Lankan rupee, Venezuelan Bolivarthe Lion of Sierra Leone, the Burmese Kyat, the Laotian Kip and the Ukrainian hryvnia.


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