Prof. William Baah-Boateng, Head of Economics Department at the University of Ghana, has stated that the losses and subsequent gains being experienced lately in the exchange rate has never been seen in the economic history of the country.
According to him, it cannot be concluded that the nation is making gains or losses merely by looking at the appreciation or depreciation of the cedi. He therefore, suggested that attention be given to the net effects of the appreciation and depreciation of the local currency in this year.
“If we look at the exchange rate data from 1960, we have never before experienced this kind of gain before and of course, we’ve not also experienced the kind of depreciation that we had over the past 11 months or so. It was a loss and it’s not like a gain so we need to look at the net effect, as to whether the net effect is positive or negative.”
Prof. Baah-Boateng
Rapid Rise and Fall of the Cedi
Speaking on PM Express Business Edition, the economist indicated that rapid appreciation as well as depreciation does not help general price levels. This is evidenced in the general prices of goods and services, especially food and transport prices that are refusing to drop.
Prof. Baah-Boateng added that this rapid rise and fall of the currency is adversely affecting businesses and stability of the economy, which further affects planning (individuals, households, businesses and the government are unable to plan for the long term, given the fluctuating prices of goods and services on the market).
Appreciation of The Cedi Creates Mixed Feelings Amongst Traders
Dr. Joseph Obeng, President of the Ghana Union of Traders’ Association (GUTA), also contributing to the discussion on the stability of the cedi, spoke on how businesses are faring following the drop and sudden rise of the Ghanaian cedi.
The current behavior of the cedi to traders is a mixed feeling, as they are torn between whether to rejoice at the appreciation of the cedi or be sad because of the losses they had made when the cedi was depreciating.
“Business has become very dicy and …some mixed feeling…Now that we should have been happy, we have used all our monies to buy at the peak level, that is when it was at GH¢15.50. Now you have to buy it cheaper and your money is even locked up there…so it is a mixed feeling out there, though we are very excited about the developments.”
Dr. Joseph Obeng
Dr. Obeng reported how some traders lost about 60% on their business capitals following the depreciation of the local currency but are now joyful because they believe their capital losses will be recouped by the recent appreciation of the cedi.
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