In May 2024, exchange rates were most impacted by currency reserves, bonds, copper prices, and demand for the US Dollar. An increase in currency reserves coupled with a falling bond spread have strengthened the Surinamese Dollar. The Chilean Peso has appreciated as a result of rising copper prices. The IMF’s rejection to restructure Ghana’s Eurobond has caused the Cedi to lose value against the US Dollar. The Nigerian Naira has depreciated as demand for US Dollars has increased.
Currencies Gaining Value Against the U.S. Dollar:
SRD – Surinamese Dollar
The Surinamese Dollar has appreciated due to the Central Bank’s increase in foreign reserves and the rise in investor confidence. The Centrale Bank van Suriname (CBvS) now has enough currency reserves to cover approximately seven months of exports. The bond spread has also been decreasing – meaning different bonds are producing more similar yields. Less variable yields between bonds tends to be a sign of stability, and increases confidence among investors. Lower inflation and public debt have also contributed to the strengthening of the Surinamese Dollar.
CLP – Chilean Peso
This month the Chilean Peso has strengthened as a result of supply and demand changes in the copper industry. Demand for copper has been increasing due to decarbonization and electrification. Supply has not been able to keep up with the increase in demand, driving the price to record highs. This has led the Chilean peso to strengthen, as Chile is the largest copper producer in the world.
Currencies Losing Value Against the U.S. Dollar:
GHS – Ghanaian Cedi
Although the Ghanaian Cedi lost value against the US dollar this month, its strength is better than anticipated. Last month, the IMF rejected a proposal from the Ghanaian government looking to restructure its Eurobond debt. However, they have decided to reconsider the request, following the cedi’s lower inflation acceleration. Ghana is continuing to proceed with caution to maintain stability.
NGN – Nigerian Naira
In the past year the Nigerian Naira has been devalued two times. Due to the declining performance of the Naira, there is an increasing pressure on the Central Bank of Nigeria as well as a higher demand for the U.S. dollar. Authorities in Nigeria have suppressed cryptocurrency as they blame it for the current weakness of the Naira.
How do currency changes affect compensation?
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