The free fall of the cedi has become a nightmare to businesses as it has hit a record low so far for this year reaching a rate of GH¢4.85 to one United States dollar.
The Ghana cedi, which depreciated against the US dollar by 3 to 4 per cent has shot up the cost of doing business in the country.
The drop is affecting importers who have to issue more cedis for the dollar and other major trading currencies.
Meanwhile, the Deputy Minority Leader, James Avedzi Klutse has predicted a further decline in the value of the Ghana cedi, following its recent free fall against the dollar.
According to him, the value of Ghana’s currency may stand at 5 cedis 20 pesewas to the dollar by December this year. He attributes this to what he calls the poor management of the economy by the Akufo-Addo administration.
The Ghana Chamber of Commerce and Industry is also warning of a severe crisis in the private sector should the government fail in dealing with the fall of the Ghana cedi against major currencies.
The President of the Chamber, Nana Dr Appiagyei Dankawoso I, stated that government through the regulator must intervene with some measures to absorb the shock of this trend.
He said, “Most of our trading and investments as a chamber hovers around the strength of the cedi. Anytime there is a fall, businesses become so much worried.”
Not so long ago, the Ghana cedi was considered safe to hold as a store of value – and therefore a good instrument for investment. It was even nicknamed ‘Kufuor dollar’, reflecting its almost consistent one-to-one parity with the US dollar.
But since the beginning of the year, that high level of confidence has waned dramatically; with people holding large stocks of the cedi dumping them especially, in favour of the US dollar, causing the cedi to depreciate at almost two percent against the dollar since the beginning of the year.
Investors with dollar-denominated mortgages are getting nervous by the day, since a continuing slide of the cedi means difficult times ahead for them. They believe it is time for government’s intervention to shore-up the cedi.
But they are not the only ones biting their nails and hoping for some state intervention. Manufacturers, whose products have a substantial component of imported inputs, tend t to buy such inputs in dollars and they lose purchasing power when converting their cedi earnings to dollars.
By Sheila Williams
