Cedi Depreciates Slowly

The Cedi has seen a consistent but slow decline against the major currencies notably the US Dollar and the British Pound during the first quarter of 2002. This trend of affairs is different from the situation in 2001 when the cedi maintained its value against the major currencies for the greater part of the year. The average interbank rate in Dec 2001 was 7,255 cedis for 1 US dollar. This depreciated by 7 per cent to 7,773 cedis for a Dollar by the middle of May this year.

The Cedi also fell against the Pound by 7 per cent during the same period, that is from 10,512 cedis per Pound in December 2001 to 11, 256 cedis per pound. Dr. Nii Noi Ashong of the Centre for Policy Analysis says several factors influenced the performance of the Cedi in the first quarter of this year.

According to him increased government expenditure in the first quarter, especially for construction works, fuelled the depreciation. Also, local companies who imported goods on credit during the Christmas had to pay back in first quarter thereby increasing the demand for foreign currency.