Ghana’s currency— cedi— has depreciated more than 8 percent since the beginning of this year, hitting around GH¢5.50 to US$1 as of Friday, March 1, 2019.
This has raised much worry among importers, traders and consumers as it has affected import duties at the ports, thereby, culminating in hike in prices of goods and services.
Commenting on this development, President Akufo-Addo has expressed concern about the continuous depreciation of the local currency, however, assuaging fears by saying government is working to keep the local currency in check.
“I am extremely upset and anxious about it [cedi depreciation] too but I want to assure you that all efforts are being made to arrest the decline and restore the cedi to stability in order to improve the competitiveness of the Ghanaian industry and, I think, very soon you will be seeing the results of our policy,” he said.
Meanwhile, a report by the Bank of Ghana titled: ‘The Effect of External Conditions on the Economy of Ghana’ said an expected slowdown in the U.S and China economies, policy rate hike in the U.S, strengthening of the US dollar and higher crude oil prices will all impact Ghana’s economy negatively, leading to a “significant deterioration in the exchange rate”.
The slowdown of the world’s two biggest economies will dampen growth in emerging and developing economies, including Ghana, which will result in capital outflows; whereas policy rate hikes in the US will attract investors, also triggering capital outflows from Ghana to the U.S, resulting in high demand for the dollar; while surge in oil prices will, although, stabilise growth, further increase inflation which will also culminate in sharp depreciation of the cedi.
“The results show that a simultaneously slowdown in the world’s two largest economies will dampen GDP growth in Ghana, induce a significant deterioration in the exchange rate and induce a marginal increase the domestic inflation rate and a sharp rise in interest rate.
A surge in oil price leads to a relatively stable GDP growth. Inflation declines initially but picks up marginally after three quarters, while the exchange rate depreciates sharply,” the report states.