Vice President Dr Mahamudu Bawumia says the Akufo-Addo-led government has steadied the depreciation of the dollar by 50 per cent.
He said government upon assuming office in 2017 inherited a highly inflated dollar to the cedi exchange rate, however, the NPP government has been able to keep it at a steady rate.
“When we assumed office between 2013 to 2016, the exchange rate was depreciating at average 18 per cent but in 2016 to 2019, it is 8.7 per cent on average.
“So we are at 18 per cent versus 8 per cent so we have reduced by more than 50 per cent the rate of depreciation of the cedi,” he said on Peace FM.
Speaking during the interview, Dr Bawumia stated that the NDC government, before leaving office had quadrupled the dollar-cedi rate [from ¢1 to ¢4], however, the Akufo-Addo government has fixed it.
“If you look at how our currency was moving under the NDC, when they assumed office, the currency in terms of the dollar and the cedi was about $1 to ¢1 but by the time they left office, they took it to $4 to ¢1. It was a quadrupling of the nominal rate of the cedi.
“If we did same on assuming office, our cedi will be standing at 16 cedis per dollar but that is not the case,” he said.
Although he noted that the exchange rate largely depends on the movement of the fundamental market forces, he said the ability of government to decrease inflation has led to the of the depreciation of the currency.
“We run a flexible exchange rate regime, not a fixed exchange rate regime so the exchange rate will move according to the fundamental market forces but fundamentally the exchange rate is going to be determined by your inflation rate , other things being equal.
“If you have a high inflation rate you will have a higher depreciation [of the cedi] likewise if you have a lower inflation, you will have a lower depreciation and that’s the fundamental,” he said.
“So if we say we are going to arrest the cedi, we are not saying we are going to lock it at one place but essentially, lock it within the rate of the fundamentals such that the lower inflation rate will produce lower depreciation,” he added.