Sub-Saharan African central banks have been boosting gold reserves to hedge in opposition to market volatility, with Ghana, Tanzania and Nigeria main the cost. BMI (a Fitch Group unit) warns this “gold rush” exposes these nations to 2 main dangers:
Worth danger – A sudden drop in world gold costs would dent the worth of their reserves and, for exporters like Ghana and Tanzania, minimize export revenues.
Liquidity danger – Changing massive gold hoards into money may show tough throughout a disaster, as seen in previous balance-of-payments squeezes in India and Argentina.
Ghana’s aggressive shopping for has pushed gold to a 3rd of its reserves, prompting a brand new hedging program to cushion in opposition to value shocks. Different nations—Kenya, Uganda, Rwanda, Namibia, Burkina Faso and Zimbabwe—are at varied phases of including gold to their stability sheets.
