In brief
- The dollar’s extended weakness in the last couple of months has begun to threaten its status as a global reserve currency.
- The cedi held its own and remained range bound depreciating by approximately 0.1% and consequently offsetting panic sale reactions by foreign investors on the domestic bond market.
- According to the finance minister, Ghana’s fiscal deficit is expected to approach 11.1% for 2020 and this underscores our concerns about how well Ghana can keep its head above water amidst the cedi’s relative stability.
- We are thus overweight shorter duration papers as there will be some harder choices to make on how to “allocate” the accumulated costs of policy response.
- Ghana Eurobonds have rallied since the beginning of June albeit not as sharply as during mid-April’s slump in crude prices when WTI1 futures, for the first time ever, traded in negative territory.
- Overall, we are risk-off and prefer to crystallise gains on some of our positions amid significant divergence between fiscal reality and market
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