Editorial by Ghanaian Times: Adopt measures to de-dollarise Ghanaian economy

Since New York became the financial capital of the world and the dollar officially became the world’s reserve currency in 1944 as a result of the Bretton Woods Agreement, the world has been trading in the dollar.

For some countries like Ghana, which import more than they export, this situation has affected their currencies so much that they always need a certain amount of dollars to stabilise their economies.

In Ghana today, the demand for the dollar is so high that the rate at which it is exchanged for the cedi has become unprecedented in the country’s financial history.

Currently, certain sources say the cedi exchanges for above GH¢14.00 to a dollar, but the reality is that it is heading towards GH¢c16.00 once other sources talk of the rate being above GH¢15.00.

In the circumstances, it appears long-term solutions are not the best options now; hence, the country would have to adopt short-term or ad hoc measures for some time.

Therefore, we cannot help but say that it is good news to hear from the Bank of Ghana (BoG) that it has enough dollars to meet the foreign exchange needs of the country.

We have no intentions to contest this, but our worry borders on why, in spite of the amount of money available, the rate of its exchange to the cedi keeps hitting the skies.

It is clear that the BoG is aware of the causes of the problems, one of which it has mentioned as speculation, and has urged those engaged in speculative purchases of dollars to stop the practice, and that the BoG remains fully committed to providing stability in the exchange rate of the cedi.

Are speculation and stabilising the economy related?

If it is so, then the BoG must do something serious and urgent about the speculation.

We want to take solace in the central bank’s caution that it has enough foreign exchange reserves to support the market and that economic agents should stop engaging in speculative purchases or they will suffer economic losses when the measures being adopted take effect.

Maybe because we are not experts, we have difficulty appreciating statements and measures because we only focus on what is happening—the realities that members of the public talk about.

The assurance from the BoG that it has adequate reserves to manage the shocks in the foreign exchange market because of its improved reserve position and whatever strength it has is good, but we expect that the measures to bring down the pressure on the cedi will take effect.

Prices of goods and services keep rising because traders and service providers in the country make reference to the value of the dollar rising against the cedi as what affects their prices and charges.

The popular appeal now is that the BoG and, for that matter, the government should strengthen the steps adopted to have the strongest effect on bringing relief to the masses.

Definitely, the country should not remain in the dollarization web forever, and as a long-term measure, Ghana must pursue what would help it join the de-dollarization movement now sweeping across the globe, spearheaded by countries like China, India, Brazil, Malaysia, and Bolivia.