Dr. Benjamin Amoah, a lecturer with the Department of Finance at the University of Ghana Business School, has asserted that the continued depreciation of the Ghana Cedi is a result of weak fundamentals in the economy.
In an interview with Accra-based Joy FM, Dr. Amoah said, “The fundamentals are definitely weak. We should not play jokes about it. The truth is that the fundamentals are very weak. What is the fundamental here? What is the inflation rate as we speak now and what is has been the inflation rate over time, very high. What is interest rate, that is the fundamental factor, it is very high.”
“What is unemployment rate now? Unemployment rate is very high. What is our balance of payment position, it is very high and these are the very fundamentals that is used in accessing the exchange rate.”
According to him, the government addressing just one of the indicators does not resolve the depreciation of the cedi, stating that “it requires effective management of each of these factors.”
The cedi was trading against the dollar at GH₵ 11.98 but now hovering around GH₵ 14.80 at the forex bureaus, resulting in a depreciation rate of close to 20% since the beginning of the year.
Amin Adam says this year’s depreciation is better than last year
Meanwhile, the Finance Minister, Dr. Mohammed Amin Adam has indicated the cedi has been strongly stabilised.
He said that the rate of depreciation of the Cedi has slowed this year compared to last year.
Despite recent pressures on the local currency, he said, the cedi’s depreciation year-to-date of 12% is far lower than its depreciation of 27% in the same period last year.
“For this reason, Ghana’s economic rebound has been quite swift, with economic growth ending the year 2023 at 2.9% against a target of 1.5%, inflation heading towards the year-end target of 15%, and interest rates declining.
“Despite recent pressures on our currency, the cedi’s depreciation year-to-date of 12% is far lower than its depreciation of 27% in the same period last year,” he said at the opening ceremony of the 2024 3i Summit in Accra on Monday, May 13.
