Cedi falls to record low since Akufo-Addo won power as businesses call for action

Cedi falls to record low since Akufo-Addo won power as businesses call for action
Source: Ghana| Myjoyonline.com |Abubakar Ibrahim
Date: 04-07-2018 Time: 01:07:10:pm
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Businesses are calling for action as the country witnesses a period of a fast depreciating local currency.

Owners of some forex bureaux are demanding that the Akufo-Addo government deals with the situation as it is affecting their business.

The cedi has hit one of its highest falls so far for this year reaching of ¢4.85 to one United States dollar.

The drop is affecting importers who have to issue more cedis for the dollar and other major trading currencies.

Joy Business’ checks show that most of the banks are exchanging one dollar for ¢4.82 and ¢4.85 which is a loss of ¢0.07 in value.

“When the cedi depreciates like this people decide to hold onto their dollars so business slows down but when the cedi appreciates people find no reason to continue holding their dollars so they let go.

Related: 'Karma is a bitch' - Ato Forson tells Bawumia as cedi depreciates

“People are saying there is nothing going on in town so the dollar is scarce. Although the demand for the dollar we don’t have any to sell to the customers and the banks also don’t supply it to us,” one owner of a forex bureau told joy Business.

In April last year, Vice President Dr Mahamudu Bawumia said contrary to criticisms that the first 100 days of government were marked by wrong calls on the economic front, evidence of progress was there for all to see. 

He cited the stability of the local currency that has brought some relief to investors and business owners.

"We have arrested the cedi from running," he said in response to the cedis' sustained its appreciation against the US dollar over the last two months.

Related: 100 days of change: We have arrested the cedi – Bawumia

Cedis journey so far…

Some of the banks have explained that the development is because most foreign investors are trying to get out of the local bond market due to higher returns in the US market.

According to sources, some of the investors are not bringing in the required dollars due to concerns with the interest on long-term bonds as well as the outlook.

Other banks have also said the Central bank is not releasing enough dollars into the system to meet their demands which has contributed to the depreciation of the cedi. They maintain the situation would not have gotten worse if the regulator has intervened to earlier.

Yet again, another school of thought claims the cedi is overvalued and some level of depreciation is required to get it right levels.

They argue that if the challenge is not contained very soon to prevent further depreciation, that would be devasting for the economy.

But the Head of Finance Marketing at the Bank of Ghana (BoG) Treasury, Stephen Opata disagrees arguing they have increased the dollar on the market.

“I am expecting that we will soon have a stable currency as we have experience for most of the first quarter and this conversation will be a thing of the past,” he said.

Businesses fear the impact of a sustained depreciation of the local currency will soon tell on prices of goods and services especially fuel prices, mortgage, food items and spare parts.

They say the development could also force BoG to hike interest rates to help minimise its impact on inflation. 

Meanwhile, the Minority in Parliament is demanding immediate action from the Vice President to stem the free fall of the cedi.

They are asking Dr Bawumia to put the cedi back under lock and key as he claimed he did last year. 

 


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