Ghana Cedi Reaches 10 Cedis Per Dollar, Ghana’s currency, the Cedi, has crossed ¢10 per dollar mark as at Friday August 19. It now trades at ¢10.01 per dollar.
In a statement, the Bank of Ghana (BoG) urged patience as it announced new measures to address the Cedi’s devaluation. The BoG has determined five major causes of the local currency’s problems.
The US dollar’s strength, investor response to a credit rating downgrade, non-rollover of maturing bonds, the steep increase in crude oil prices and their effect on the oil bill, and the loss of external financing are these.
According to the BoG, measures have been put in place to address these issues, including the “Gold Purchase Program to increase foreign exchange reserves; Special Foreign Exchange Auction for the Bulk Distribution Companies (BDCs) to help with the importation of petroleum products; and Bank of Ghana is entering into a cooperation agreement with the mining companies to give BOG the opportunity to buy gold as it becomes available.
“The Bank of Ghana is supporting the banking sector with foreign currency liquidity to help meet the demand for external payments. The recently approved USD750,000,000 Afriexim loan facility by Parliament, once disbursed, will boost the foreign exchange position of the country and help restore confidence.
“The Cocoa Loan is anticipated in the year’s last quarter. Additionally, this facility will contribute to the provision of more foreign cash to combat the cedi’s depreciation. When the IMF program is finished, we anticipate that it will significantly contribute to regaining investor confidence in the economy and stimulating portfolio flows.
The government of Ghana was also advised to establish a currency board by Johns Hopkins University Professor of Applied Economics Steve Hanke as part of efforts to stabilize the Cedi versus the major trading currencies, particularly the dollar.
He placed Ghana’s currency 15th among a list of nineteen performing currencies.
In a tweet, Prof Hanke said “By my calculations, the Ghanaian Cedi has depreciated 34.17% against the USD since Jan. 2020, which is why Ghana is in 15th place in this week’s Hanke’s #Currency Watchlist.
“To save the cedi,” he said, “Ghana must mothball its central bank and install a #CurrencyBoard.”
Ghana is ranked 10th on this week’s inflation index, he noted. On August 4, I recorded an astonishing 58% annual rate of inflation in Ghana—nearly double the official rate of 30% annually. Ghana must establish a Currency Board and shutter its central bank.