VIDEO: Why is the cedi still falling? BoG Governor answers
The Governor of the Bank of Ghana (BoG), Dr Ernest Addison has attributed the depreciation of the Ghana cedi to capital flight and the global economic impact of the COVID-19 pandemic.
In a live interview streamed on the Facebook pages of the Graphic Business on Facebook@graphicbusiness, the Daily Graphic on Facebook@dailygraphicghana, Dr Addison told the Graphic Business Editor, Mr Theophilus Yartey that the cedi has depreciated by less than two per cent in 2020.
Advertisement
He explained that the value of the cedi reflects many factors, including the domestic economy and developments in the global economy.
Dr Addison was responding to the question: "Why is the cedi still falling when we have less imports and forex-based transactions?"
He said: "The cedi reflects many factors, It reflects our domestic economy. It reflects developments in the global economy and If you look at what has happened worldwide, we have seen capital leave jurisdictions such as ours into the advanced economies.
"Now, when that happens, it has an impact on the availability of dollars in Ghana and that can trigger a depreciation of the currency. Now, if you look at this year 2020, we started the year on a very strong note, with very strong reserves and then also we went very early to the capital markets to issue a three million dollar bond. So, by January and February, the cedi was appreciating. If you look at the data very carefully, the Ghana cedi appreciated for nearly two months of 2020 until the global shock came in terms of this COVID pandemic and then we saw capital flowing out of countries like ours and therefore the cedi also started losing value.
"And therefore if you look at the year-to-date statistics you will see that the cedi this year has depreciated by less than 2 per cent because there has been quite a significant appreciation of the currency in the first two months of the year."
Cedi performance
It would be recalled that in February, Bloomberg data indicated that the cedi was the world’s best-performing currency against the dollar this year.
At the time, the currency of the world’s second-biggest cocoa producer strengthened by 3.9%, the most among more than 140 currencies tracked by Bloomberg, a turnaround from last year, when it weakened 13%.
However, the cedi has since weakened against the dollar, now trading at 5.79 Ghanaian Cedi to one United States Dollar.
Watch the interview below;