The President of Policy Think Tank, IMANI Africa, Franklin Cudjoe, is calling for more sustainable measures from the Bank of Ghana to stabilize the cedi despite the local currency’s recent stability.
The Cedi has in recent times seen some relative stability, appreciating by 4.5 percent on-year to date basis.
Speaking to journalists on the sidelines of a pension programme organized by Axis Pension Trust, Mr. Cudjoe stated that external factors in China, for example, may have reduced the demand for dollars for trading leading to the cedi’s relative stability.
Although Mr. Cudjoe did not make specific reference to the ravaging coronavirus in China, suggestions are that trading activities in that country have reduced drastically due to the disease.
“The plummeting fortunes of China, and to think that most of our traders are no longer externalizing our dollars outside of the country has also impacted. I think it is early days yet to start jubilating,” he said.
He argued that it is time for the Bank of Ghana to resort to more sustainable measures for the long term stability of the currency.
“The stability of the currency so far, it is not necessarily any stellar effort by the central bank even though the forward sale of currency is useful”.
Performance of the cedi this year
The local currency has enjoyed a good run against its major trading partners in the first month of the year, appreciating against all the three major currencies, the dollar, euro and pound sterling, according to data released by the Bank of Ghana.
The cedi, which depreciated against all the three currencies last year, has found a renewed strength and has so far held its own to make gains on its trading partners.
According to the Bank of Ghana’s Summary of Economic and Financial Data, the cedi in the first month of the year has so far appreciated 0.3 percent against the dollar, made a 1.9 percent gain on the British pound, while recording a 2.3 percent appreciation against the Euro.
Last year, the cedi depreciated 12.9 percent, 15.7 percent and 11.2 percent against the dollar, pound and euro respectively.