Apart from having the highest number of under-developed countries, Africa also serves as home to some of the worst-performing currencies in the world. This has resulted in a very high cost of living for people residing in the countries.
According to Africa’s Pulse Report, October 2022 Volume by the World Bank, inflation on the continent is caused by Russian invasion factors as well as the depreciation of currencies against the dollar and increase in commodity prices.
From the data pool of the World Bank, here is a list of the worst-performing currencies in Africa in 2022.
Ghanaian Cedi – Ghana
According to the World Bank report, Ghana Cedi is the worst-performing currency as of October 2022. The report said, “The worst performing currency in the region since the beginning of the year is Ghana Cedi with a depreciation of 60 %”.
The currency was believed to have plummeted as investors pulled their investments from the country due to high inflation. With the increase in inflation, the Ghanaian government has requested a loan facility from the International Monetary Fund (IMF) to stabilise commodity prices and fund its economic programmes.
Although the World Bank listed the currency as the worst, Steve Hanke, a professor of Applied Economics and Director of the Troubled Currencies Project and publisher of Hanke’s currency watchlist, believes otherwise. He said that though the currency is not the best, it is not the worst on his list.
South Sudanese Pound – South Sudan
As of October 2022, the South Sudanese pound has declined by 50.8 %. This makes it the second worst-performing currency on the continent.
This is due to the country’s weak foreign reserves, corruption, lack of investors and 15% drop in the currency in March 2022 when the country’s central bank said it wanted to unify exchange rates and float the currency. In contrast to Hanke’s list, the country ranked 12th in the world.
Sudanese pounds – Sudan
According to the World Bank, the Sudanese pound declined by 28.6% as of October 2022. The constant decline in the country’s economy could be linked to the coup that occurred during the same period under discussion and the blockage of the country’s main export route,
As a result, the country struggles with hyperinflation and foreign exchange scarcity. The inflation rate in the country in 2021, according to World data, was recorded at 382.8%.
Malawian Kwacha – Malawi
Against the dollars, the Malawi Kwacha declined by 25.4%. The country recorded its highest devaluation in ten years when its currency was reduced by 25% due to inadequate foreign reserves.
Also, the foreign exchange rate was reduced by 42%. The decline can be attributed to environmental issues such as storms which have affected production, the Russian-Ukraine war, the high cost of exportation and a reduction in tobacco exportation, which contributes about 60% of the country’s foreign exchange.
As the CFA Franc is pegged to the Euro, the CFA Franc declined by 13.3%, making it the continent’s fifth-worst-performing currency. This is because anything that affects the Euro also impacts the CFA Franc. For instance, the Euro saw its first decline in two decades, causing a ripple effect.
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