A lecturer at the University of Ghana Business School Prof Godfred Bokpin says there is no need to panic excessively over the apparent fall of the cedi.

According to him, the fall in the currency may be temporary because it is not driven by the fundamentals of the economy but by externally driven factors which are temporary as well.

“The current depreciation we are seeing cannot be attributed totally to weak economic fundamentals because the fundamentals of the economy in the last one and half years have improved significantly,” he said.

“I think what is happening to the cedi is more a temporary issue, more externally driven as a result of the hike in interest rate in the US for which reason investors are taking early redemption of investment securities,” he added.

He was quick to say that the situation will soon normalize.

His comments come at a time when the cedi is said to be at its lowest in the last two years selling at around ¢4.85 to a United States dollar.

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

Some businessmen have already started lamenting over the fall of the currency.

“Business has gone down drastically. The demand for the dollar is high…” a businessman told Joy News.

“The cedi depreciation has affected our business very much,” a Forex Bureau operator added.

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.

For a government that gave a lot of promises to stabilize the cedi and the general macroeconomic environment, the criticisms, especially from the opposition NDC have vehement.

Minority spokesperson on Finance Cassiel Ato Forson challenged the Vice President, Dr Bawumia to fix the problem he so eloquently diagnosed when he was in opposition.

Dr Bawumia

Deputy Information Minister Kojo Oppong Nkrumah said the situation will be arrested.

He said government’s intervention has actually slowed down the depreciation, hinting the situation could have been worse.

He said with the inflows coming in the situation will normalize in the shortest possible time.

“When it comes to questions of the economy I don’t think the predictions of the minority are things that we can hold on to,” he stated.

Prof Bokpin largely agrees with government’s assessment of the situation.

He said because the depreciation is largely externally driven, other countries including Argentina are facing the same depreciation in their local currencies.

He said the government has some reserves it can use to support the cedi but will not support a wholesale intervention in the market by the Central Bank in terms of the injection of dollars.

“It doesn’t seem like it is completely out of control,” Prof Bokpin added. 

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