The free fall of the Ghana cedi-one side of the die

Read Comments Comments (14)

• GAbaa 11 years ago

  What are you trying to tell us?. You are all over the place, We know by facts on the ground that the cedi has depreciated against the dollar. What are the exogenous factors that are playing a role in this fact. Explain by ex ...
  read full comment

  What are you trying to tell us?. You are all over the place, We know by facts on the ground that the cedi has depreciated against the dollar. What are the exogenous factors that are playing a role in this fact. Explain by examples and deductions, you just don't explain by rote.

  reply
• Ken Ntiamoa 11 years ago

  Ghana has a very small economy relative to that of the US. It is like comparing an ant to an elephant.
  
  The strength of one country's currency relative to the other is largely a measure of the relative strength's of the t ...
  read full comment

  Ghana has a very small economy relative to that of the US. It is like comparing an ant to an elephant.
  
  The strength of one country's currency relative to the other is largely a measure of the relative strength's of the two countries.
  
  In 2007,when Ghana re-denominated their worthless paper and artificially made the new cedi worth more than the US dollar, I was just laughing. I knew that it was just a matter of time for a major correction to take place and it just must have started. Indeed, I must commend the administrators of the Ghanaian economy for being able to hold the cedi relatively stable since July 2007 until. But, every serious analyst should have known that those earlier rates were artificial. We haven't seen the end yet.
  
  If we are not careful and we hit the panic button, the fall will be so sharp that we will all feel very dizzy.
  
  Currency rate is neither here nor there. Whether the rate is C5 to $1 or
  C2 to $1 is immaterial. What is material is the rate of change of the exchange rate. If the exchange rate changes rapidly up or down,planning difficult for different sectors of the economy.
  
  The measures so far proposed taken by BOG to avert a sharp decline are good measures that must be supported by all. Notably, the dollarisation of the Ghanaian economy. Ghana's legal tender is the cedi, not the dollar. When rent, hotel bills, house prices and fees at international fees are not only quoted in dollars but are actually paid in dollars, it puts enormous demand for dollars within Ghana. But Ghana does not "manufacture" dollars. That kind of demand will definitely put a downward pressure on the cedi.
  
  There are however two things mentioned by BOG that I disagree with.
  
  1. The 200 Pip spread on the Cedi/dollar Bid and Ask prices. This policy will surely put a downward pressure on the cedi. There is not enough time for me to explain why in detail
  
  2. The ad-hoc nature of the measures taken so far and publicly those measures were taken. That is a sure way of sending the panic signal to the people. Let everybody calm down until the cedi finds its own equilibrium.
  
  
  Ken

  reply
• Owura Kwaku Ntiamoah 11 years ago

  I like it when someone crunches the numbers and tries to use them to explain a phenomenon. Many years ago when I was working on a Master's program, one of my professors directed me to a rather tiny book. It was called "How ...
  read full comment

  I like it when someone crunches the numbers and tries to use them to explain a phenomenon. Many years ago when I was working on a Master's program, one of my professors directed me to a rather tiny book. It was called "How to Lie With Statistics". That book was an eye-opener. I loved it so much that I kept it, and I still have it somewhere in my tons of books. I can tell you that one school is better than the other because 100% of its students gained admission to college, whereas only 70% of the other school's students gained admission to college. But what if in real numbers the school I classified as the better school had only one student and the school I rated as second had ten students? Would you still consider my classification scheme as being accurate? The numbers-crunching game sometimes doesn't tell the entire story. So it is with this article. The South African Rand has truly not done too well vis-a-vis the dollar. But the South African economy is a much more developed economy than that of Ghana, and is able to absorb much of the shock that is attendant to the variations in the currency. The Canadians, like the Chinese, play fast and loose with the CAD so that Canadian goods will not be too expensive on the US market. Mind you, without the extremely profitable US market some countries will clearly not be in existence. The Nigerian Naira has been able to hold somehow steady against the dollar not because of any excellent policies pursued by the Goodluck administration, but because the US is the major buyer of Nigerian oil; and Nigeria has been an accidental beneficiary of the steady (or, in fact, the rising) prices of oil.
  Ghana, on the other hand, is not dependent on one major export commodity. So, but for the stunted and bad economic policies of the Mahama administration, the cedi could have held its own. I am not a member or a die-hard supporter of any political party, but I can tell you that the policies pursued by the Kuffuor administration, although not perfect, was a zillion times better than the policies of the current administration (that is, if they can be called policies).
  Mr. Ussif, as you noted, people who receive pension payments periodically receive COLA (Cost of Living Adjustments). Ask this administration if they even know the meaning of COLA.

  reply
• Wiafe 11 years ago

  The Ghanaian economy has a weak export base--so the inflow of dollars is not enough to balance the demand for dollars to finance the middle-class lifestyle products many in Ghana now depend on.

  The Ghanaian economy has a weak export base--so the inflow of dollars is not enough to balance the demand for dollars to finance the middle-class lifestyle products many in Ghana now depend on.

  reply
• Kwasi Ntiamoah 11 years ago

  Owura kwaku, it seems you focus when you got to final part of your discourse concerning numbers by saying Kufour government fared better than the current administration. I ask you, how based on numbers, how many years did the ...
  read full comment

  Owura kwaku, it seems you focus when you got to final part of your discourse concerning numbers by saying Kufour government fared better than the current administration. I ask you, how based on numbers, how many years did the Kufour rule Ghana, and compare it with Mahama's (minus 8 months of wasted time on the useless and senseless court case). Do you now realize that I t is not worth comparing.

  reply
• LARYEAH 11 years ago

  MAHAMA HAS BEEN IN OFFICE SINCE 2008. HIS ADMINISTRATION HAS COME UP WITH FAILED POLICIES ONE AFTER THE OTHER.

  MAHAMA HAS BEEN IN OFFICE SINCE 2008. HIS ADMINISTRATION HAS COME UP WITH FAILED POLICIES ONE AFTER THE OTHER.

  reply
• LARYEAH 11 years ago

  THAT IS AN EXCELLENT DEDUCTION. IF ONLY THE AUTHORITIES WILL PAY ATTENTION. I LIKE REASONABLE PEOPLE WORLDWIDE, BUT I DO NOT LIKE REASONABLE GHANAIANS, I LOVE THEM.

  THAT IS AN EXCELLENT DEDUCTION. IF ONLY THE AUTHORITIES WILL PAY ATTENTION. I LIKE REASONABLE PEOPLE WORLDWIDE, BUT I DO NOT LIKE REASONABLE GHANAIANS, I LOVE THEM.

  reply
• MARK 11 years ago

  Ghanaians should stop importing tooth-pick with the dollar! They should stop demanding dollar for goods and services and have trust in the cedi. That is the only way forward. Hotels and the rest who are draining this country ...
  read full comment

  Ghanaians should stop importing tooth-pick with the dollar! They should stop demanding dollar for goods and services and have trust in the cedi. That is the only way forward. Hotels and the rest who are draining this country of the hard currecny should be sanction when caught.

  reply
• Dagabie 11 years ago

  Buy, eat, wear, drink, sleep, work, respect yourself as a Ghanaian etc made in Ghana goods and the Cedi will appreciate.

  Buy, eat, wear, drink, sleep, work, respect yourself as a Ghanaian etc made in Ghana goods and the Cedi will appreciate.

  reply
• Menua Kwadwo 11 years ago

  Which "MADE IN GHANA" goods do you have in mind?

  Which "MADE IN GHANA" goods do you have in mind?

  reply
• EZEKIEL 11 years ago

  In my view, the whole "Cedi-Fall" discussion is too academic. I'm NOT an economist but judging from our GLUTTONOUS APPETITE for ANYTHING FOREIGN, our emphasis should be on MANUFACTURING in Ghana, some of which we can ALSO EXP ...
  read full comment

  In my view, the whole "Cedi-Fall" discussion is too academic. I'm NOT an economist but judging from our GLUTTONOUS APPETITE for ANYTHING FOREIGN, our emphasis should be on MANUFACTURING in Ghana, some of which we can ALSO EXPORT,if NOT to the USA and Europe, because of their policies SOMETIMES to bar ANYTHING apart from RAW MATERIALS,to other African countries!!!
  ALL our IMPORTS have to be PAID for in US$ or € !! The DEMAND is just too much and the ABILITY to GENERATE those currencies DOESN'T match!!!
  A second point is that our Nation doesn't know HOW TO SAVE.!!! We BORROW MONEY just to SPEND and NOT on REAL JOB CREATION!!!
  So many useless Embassies for NOTHING but spending on them to SHOW that we are also (in)-dependent!!!
  OUR PRIORITIES ARE SCREWED!!!
  JOB CREATION

  reply
• OKOE 11 years ago

  I USE TO VISIT THE VOLTA HOTEL AT THE VOLTA RIVER AUTHORITY LOCATION. THEY CHARGE IN DOLLARS. MY POINT IS, HOW MANY GHANAIANS CAN AFFORD TO STAY AT THIS HOTEL ON THEIR SALARIES? NO DOUBT THE PATRONAGE IS POOR. I MAY BE WRONG ...
  read full comment

  I USE TO VISIT THE VOLTA HOTEL AT THE VOLTA RIVER AUTHORITY LOCATION. THEY CHARGE IN DOLLARS. MY POINT IS, HOW MANY GHANAIANS CAN AFFORD TO STAY AT THIS HOTEL ON THEIR SALARIES? NO DOUBT THE PATRONAGE IS POOR. I MAY BE WRONG BUT MY FEELING IS, THE HOTEL BEING THAT FAR AND AT THAT LOCATION, THEY NEED TO DO SOMETHING WITH THE COST OF STAYING THERE. THEY ARE IMPROVING ON THE AMENITIES YET THE COST DISCOURAGES PATRONAGE.

  reply
• mky 11 years ago

  Aminu, for God's sake, don't you know this basic fact, that Nigeria and Norway whose currencies you cited as being resilient are top oil producers? Their daily intake of foreign exchange is enough to shore up their currencies ...
  read full comment

  Aminu, for God's sake, don't you know this basic fact, that Nigeria and Norway whose currencies you cited as being resilient are top oil producers? Their daily intake of foreign exchange is enough to shore up their currencies against the dollar......Ghana earns a measly sum from its oil exports and therefore will see severe fluctuations in its currency......

  reply
• OLA BABS 11 years ago

  CAN PRESIDENT GOODLUCK JONATHAN HELP D SITUATION?????????????

  CAN PRESIDENT GOODLUCK JONATHAN HELP D SITUATION?????????????

  reply