The Ghana cedi is expected to end 2022 at ¢7.03 to the US dollar, the Center for Economics, Finance and Inequality Studies has projected.
According to the Center, its forecast of the end-year depreciation of the cedi to the dollar is 99% accurate.
This means that the cost of operations of businesses, particularly manufacturing, will go up. This will consequently trigger increases in prices of some goods on the market, and for that matter inflation.
The Centre therefore wants the Bank of Ghana to supply enough forex to meet the demand of the dollar as it appears the current forex auction strategy is not meeting the market demand for forex.
“This view of inadequate supply of forex is gleaned from the wide disparity that exist between Bank of Ghana’s forex quote and the interbank quotes. The similar disparities in quotes among banks at the retail level also indicates the inadequate supply of forex on the market”, it pointed out.
Over the medium term, the Center urged the state through the Ministry of Finance and the Ministry of Trade and Industry to show clear commitment in pursuing policies aimed at strengthening the local currency.
“The government as the largest purchaser of goods and services must commit to replace a good proportion of its purchases with domestically produced goods. This strategy would go a long way to reduce the imports of such goods and services, hence reduce the demand for forex needed to pay for such goods and services”, it stressed.
In conclusion, it called for a coordinated and a balanced monetary and fiscal policy measures between the Bank of Ghana and the Ministry of Finance targeted at stabilising the Ghana cedi.
“In as much as the Bank of Ghana has the mandate to stabilise the local currency, there is the need for a coordinated and a balance monetary and fiscal policy measures between the Bank of Ghana and the Ministry of Finance targeted at stabilising the Ghana cedi. Without a coordinated monetary and fiscal policy management of the local currency, the Bank of Ghana’s effort at stabilising the Ghana cedi would see little success”, it added.
Cedi placed 14th among league of African currencies in 2021
The Ghana cedi placed 14th among the league of African currencies in 2021, despite an impressive run during the first half of the year, Bloomberg tracking of African currencies revealed.
However, the local currency was classified among the currencies with the ‘worst spot returns’.
According to Bloomberg, the cedi lost 4.98% in value against the US dollar in 2021, although data from other research institutions showed a slightly lower decline in value of the local currency to the American currency.
However, in West Africa, the cedi placed 3rd in terms of performance.