2016 New Patriotic Party (NPP) flagbearer aspirant Alan Kwadwo Kyerematen has predicted a short-lived relief and celebration of the rise of the Ghana cedi against currencies of major trading partners.
Following an over 30% depreciation against the dollar and 25% against the Euro, Ghana’s currency, the cedi, has began showing steady signs of stability. The rate of depreciation has dropped from 6.37% to 2.5%. The cedi has appreciated against the Euro by about 0.38%.
These gains have caused some relief for businesses as the dollar they often use to transact business is reportedly more available than it used to.
But according to Alan, Ghana is not yet uhuru.
Grounding his argument, Alan ‘Cash’ pointed out two “temporary” causes of the cedi’s recent rise – the $1billion Eurobond recently over-subscribed and a cocoa syndicated loan of about $1.8billion.
The two facilities are bringing in nearly $3 billion, enhancing the supply of the dollar which reduces its value as the Bank of Ghana had planned.
But Alan believes that as long as the loans are going to be paid back and done so in dollars, another scarcity of the currency of the world’s greatest super power will be triggered.
“Once the bonds mature, you have to start paying back in dollars” bringing Ghana back to square one, he explained.
The $1 billion Eurobond has a 12-year maturity, with a coupon rate of 8.125%. The bond matures in 2026.
He said reliance on "loans to support your currency” can only be a “short-term” measure. For any long-lasting improvement, Alan Kyerematen argued that Ghana would have to increase its export revenue.
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