[ 2019-03-04 ]

Cedi depreciation tilting towards EIU predictions
The local currency since the beginning of the year
has seen over 8.6 percent depreciation

As the cedi continues to show some weakness
against the dollar, there are calls from observers
to halt the rate of depreciation the currency to
stabilize prices.

The local currency since the beginning of the year
has seen over 8.6 percent depreciation, causing
currency analysts to question measures put in
place to stabilize the cedi.

The cedi, as at December 2018 was trading against
the dollar at 4 cedis 86 pesewas. The currency
then began to experience a drop by the third week
in January.

Checks by Citi Business News at forex bureaus on
Friday [March 1, 2019] indicated that the cedi has
weakened to 5 cedis 33 pesewas.

This is more than 8.6 percent depreciation since
January this year.

In Mid December 2018, the Economist Intelligence
Unit (EIU) predicted that the local currency will
hit 6 cedis 39 pesewas by 2023.

According to the Economist Intelligence Unit, its
forecast was premised on the cedi remaining prone
to periods of volatility, given a dependence on
commodity prices and broader decline in investor
sentiment towards emerging markets.

In February 2019, President Akufo-Addo expressed
concerns over the depreciating rate of the
currency assuring that government will do all it
can to fix it.

Speaking at the commissioning of the Fujian Sentuo
Ceramics Company at Kpone in Accra, on February
27, President Akufo-Addo said “I am
extremely upset and anxious about it, but I want
to assure you that all efforts are being made to
arrest the decline and restore the cedi to
stability.

Meanwhile, officials at the Bank of Ghana say
almost all the macro-economic indicators are
pointing in the right directions.

Head of Financial Markets at the Bank of Ghana,
Stephen Opata said the depreciation is partly due
to external factors due to increases in the U.S
interest rates which is causing investors to move
their funds to invest abroad. This he says has
caused the demand for dollars to go up.

Already importers who are lamenting over the rate
of depreciation have warned that they will have no
other option but to pass on the cost to consumers.

Source - citibusiness

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