As of Friday, February 18, the Ghanaian cedi depreciated at Ghc 6.43 at the interbank foreign exchange market. Today, it has depreciated by 4.70% in 45 days to the US dollar while selling on the retail market at about Ghc 7.09 at some forex bureaus, a Joy Business report has revealed.
In addition to this, international credit rating agencies, Moody’s Investor Service and Fitch Ratings have both downgraded Ghana’s creditworthiness.
Reacting to this, President Akuffo-Addo admitted to the cedi’s performance as being of major concern to him and the government as well as the business community and citizens.
“But I want to assure you that all efforts are being made to arrest the decline and restore the cedi to stability to improve the competitiveness of Ghanaian industry and I think very soon you will see some results,” The President, as quoted by Citi Business News.
The cedi’s predicament has been largely attributed to the uncertainty about Ghana’s fiscal outlook, despite interventions by the Bank of Ghana.
The situation could compel the Central Bank to introduce additional measures to contain the rapid fall of the local currency, though much work needs to be done by managers of the financial economy to reassure investors that revenue will be boosted, whilst the rising debt will be tamed.
Market analysts have since attributed the cedi’s current woes to upside risks such as the high-interest payments, lack of adequate revenue mobilization, increasing government expenditure, and high debt concerns.
These factors, the analysts believe have resulted in investors existing and trading off Ghana’s bond on the international bond markets while access to international capital markets remains uncertain.
Meanwhile, if the value of the cedi does not improve, then businesses, particularly manufacturers that depend so much on imports for production will have to revise their budgets, whilst prices of some goods on the market will go up because of imported inflation.
By: Jeffrey Addy