African governments are scrambling for dollars, and this is creating a new dividing line for investors.
Amid the continent’s deepening shortage of hard currency, governments are turning to barter, currency devaluation, central bank exchange controls and aid from the International Monetary Fund and the Middle East to shore up their balance sheets.
Investors are rewarding nations whose efforts to boost dollar liquidity are paying off. But they penalize those who cannot guarantee access to the currency they need to invest and repatriate returns, and avoid countries without adequate reserves to cover import costs or repay debts. African currencies have been the world’s worst performers this year, with about a dozen down at least 15 percent against the dollar.
Eurobond issuers forced to devalue this year include Egypt, Nigeria and Angola. Kenya’s dollar bonds have handed investors losses of 2.1% since early July when US Treasury rates began to rise, pushing the idea of ”higher for longer” interest rates.
Read more at bloombergtv.bg
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