Bank of Ghana governor; Ernest Addison believes the worst is over for the cedi, noting in a Bloomberg TV interview that series of factors conspired in forcing the cedi to depreciate steeply after relative stability prior to the fall.
Offshore holders of domestic debt failing to roll back their maturing investments, the central bank getting compelled to build reserves to meet targets under International Monetary Fund programme as well as the cedi registering a 16 percent decline against the dollar are the factors the governor notes accounted for the steep decline in the first quarter.
Mr. Addison however reckons things can only look up now given measures put in place to strengthen the currency.
“The key thing to recognise is that the exchange rate will reflect the fundamentals of the Ghanaian economy, and we believe that the fundamentals are at the appropriate places,” he submitted.
He also acknowledged a need to contain inflation noting the country can’t “remain competitive having inflation rates of 8 percent when our trade partners have lower inflation of about 5 percent. That creates problems for currency stability.”
According to Mr. Addison, there have been some gains including a turnaround in the macroeconomics as well as retain the monetary policy rate.
By Michael Eli Dokosi/goldstreetbusiness.com