US-based Associate Professor of Finance, Williams Peprah, has attributed the high inflation in many developing countries such as Ghana to the strong US dollar.

According to him, this has triggered spikes in food and imported inflation.

He, therefore, wants countries to trade among themselves in an ‘acceptable currency’ instead of the overreliance on the American greenback for transactions.

At a webinar on the topic ‘Dollar Dominance’, organised by the Adventist University of Africa in Kenya, and supported by School of Postgraduate Studies of Andrews University, Professor Peprah said Ghana and other countries must find a way to reduce the dollar dominance of trade in their respective economies.

“If we find out that local the currency is devaluing all the time, it means that we have to increase our prices and that is really happening in most economies in the world. A little bit of the inflationary pressures we have seen in the world, most of us are saying that it is because of the dollar becoming stronger by the day”.

He furthered that “If you have an alternative for someone in Ghana to be able to trade with someone in Kenya in an acceptable currency, between someone in Ghana and say South Africa in an acceptable currency within Africa, then it will be able to help to create more entrepreneurship. But now the currency we are all using as acceptable currency is really affecting planning, pricing of products and also affecting consumers”.

Inflation ended 2022 at a rate of 54.1%. It was pegged at 43.1% in July 2023.

Professor Peprah said the major component of inflation is a result of the exchange rate devaluation of the cedi, adding, “So such a situation is what is really affecting entrepreneurs and also if an entrepreneur wants to go and look for facilities or loans to engage in international trade it becomes a challenge. The question they will be asked is that are you going to sell your product in your local currency”.

“It really affects the pricing of products. Entrepreneurs are not able to price their products because the exchange rate between the local currency and the US dollar keeps changing; it becomes very volatile”, he continued.

He concluded that “These are the factors that are really affecting entrepreneurs. It affects planning and for us, in the developing countries we cannot plan, we need a form of stable currency that will help us to be able to plan the long term”.