‘BoG ill-equipped to reverse falling cedi, rising inflation’

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• JAMES Y 11 years ago

  What is 'killing' the cedi is over-dependency of import in the Ghanaian economy. Almost all consumer goods in the country are imported and, as they do, the cedi suffers in value. It's as simple as that - never mind everything ...
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  What is 'killing' the cedi is over-dependency of import in the Ghanaian economy. Almost all consumer goods in the country are imported and, as they do, the cedi suffers in value. It's as simple as that - never mind everything else!

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• ROY 11 years ago

  Ghana is operating floating exchange rate system as opposed to fixed exchange rate system and exchange rate of the cedi to the dollar is set by forces of demand and supply. Demand for the dollar is high due to our astronomica ...
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  Ghana is operating floating exchange rate system as opposed to fixed exchange rate system and exchange rate of the cedi to the dollar is set by forces of demand and supply. Demand for the dollar is high due to our astronomical demand for imports that must paid for in dollars by converting cedis into dollars. So, we are facing a situation of "too much cedis chasing too few dollars". So the price/rate of dollar is high whereas the price/rate of cedi is low.
  
  One (there are other ways) way out of the weak cedis is to reduce imports and the public will import if they have cedis in their hands so the BoG tries to control the amount of cedis in in the hands of the public by increasing the bank rate, the rate at which the commercial banks lend to the public, thus discouraging the public from borrowing by making it more expensive to borrow from the commercial banks.
  
  The increase in the bank rate will definitely make cost of capital high but this is compensated by certain concessions enjoyed by investors eg tax concessions.

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• KWAME KWAME 11 years ago

  We are all pointing fingers at the Governor of Bank of Ghana to resolve the current economic woes Ghana finds herself in. But you will recall that last week Governor Wampah was pushing Mr. Terker to do his part. Refer to la ...
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  We are all pointing fingers at the Governor of Bank of Ghana to resolve the current economic woes Ghana finds herself in. But you will recall that last week Governor Wampah was pushing Mr. Terker to do his part. Refer to last week's Ghanaweb article titled "Exhausted Wampah demands Terkper action". It has been rightly pointed out by the writer, the answers to these economic challenges depends more on the actions taken by the Minister of Finance - Mr. Terker and not the Governor of the Central Bank as the options for monetary policy have been exhausted. He needs to revamp the fiscal policies. Since we need to shore up our foreign currency reserves to stem the cedi fall, he must increase, heavily, taxes on selected imports especially for consumer goods. On the other hand there is need for more investments for job creation so he must give tax incentives and deductions etc. to businesses/entrepreneurs/firms that import machinery etc. to build industries and produce goods for exports and import substitution.

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• Kofi Wiseman 11 years ago

  The basic cause of the depreciation of the cedi is the excess liquidity in the economy due to fiscal indiscipline and deficit financing spearheaded by the Bank of Ghana itself. Ghanaians are willing to exchange over GHC3.00 f ...
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  The basic cause of the depreciation of the cedi is the excess liquidity in the economy due to fiscal indiscipline and deficit financing spearheaded by the Bank of Ghana itself. Ghanaians are willing to exchange over GHC3.00 for US$1.00 only because there is too much of the cedi in the system, though in just few hands.

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