[ 2017-03-09 ]

Cedi’s strength shows health of economy- Prof. Bokpin
Economist and Head of Finance at the University of
Ghana Business School, Professor Godfred Alufar
Bokpin has attributed the cedi’s fall to the
weak fundamentals of the economy.

According to him, the health of the cedi is a
reflection of the real sectors of Ghana’s
economy which are currently weak and unstable.

Figures available to Citi Business News from the
Bank of Ghana as well as Forex bureaus across the
country show that the cedi has depreciated by
about 5.4 percent between January and February of
this year alone on the interbank forex exchange
market and as much as 6.72 percent in the same
period across forex bureaus in the country.

Speaking at post budget analysis programme
organized by the Ghana National Chamber of
Commerce, Professor Bokpin warned that the
instability of the cedi should tell government
that the increase for import goods must be
reduced.

“What is happening to the cedi is a true
reflection of what is the fundamental level of our
economy, the structure of our economy. So you may
even add more heads to the currency notes against
one head and it will not work, because the
competition is not [about]the number of heads, it
is  about what is backing your currency,” he
said.

He explained that the currency of  a country to
large extent determines the value of goods and
services, hence the macro stability.

He stated that with Ghana’s high level of
imports, the cedi will always be under pressure
since it will trade among other currencies backed
by the value of their exports.

“What is backing the cedi?, it’s a small open
economy where more than 70 percent of business
input cost in this country is imported. How do you
expect the cedi to behave differently? Certainly
not, until we look at the fundamentals, the cedi
will continue to do what it has been doing. It has
to adjust to reflect the new equilibrium. It is as
simple as that,” he said.

Source - citibsinessnews.com

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