The local currency of Ghana, which was trading at 3.90 to the U.S.dollar last year, has tumbled cumulatively by 8.0 percent, and now is trading at around 4.65 to the money (dollar).
“The amount of devaluation is worrying and needs immediate guidelines to stop this pattern, but we have always gone through this pattern, especially after elections,” Ampah informed Xinhua.
He linked the craze to the go back to company of importers, allowing the need for the U.S. dollar currency more than it had been previously.
The specialist also mentioned dollarization of the economic system where prices of products or solutions are estimated in the dollar instead of in the local cedi currency of Ghana as one of the main causes.
He advised that the way ahead would be to increase foreign exchange trading income through improving trade as well as building assurance in the Ghana cedi to carry out its part as a store of value instead of using the dollar.
In his opinion, economist David Gatsi of the University of Cape Coas informed Xinhua via phone that the causes, apart from following the craze of yearly periods where payment had to become in the first quarter of the year for products brought in in the last one fourth of the season before, investment strategies in dollar had become an alternative investment opportunity for Ghanaian’s.
“Also before the elections, some traders disinvested and, along with the kind of investment made in the economic system, in comparison to the restricted accessibility of the dollar, with the foreign exchange market being very vibrant, as well as re-payment of various loans shortened by govt, these factors are likely to happen,” he included.
The economist also linked a largest part of the current devaluation of the cedi to actions of traders and utterances by the new managers of the economic system about some macro-economic signs.
“With a change in govt, a lot of adverse feedback have been created about the economic system by some key numbers among the new managers of the economic system, who clarified claims about the delicate characteristics of the financial industry. The marketplace has also grabbed these feedback and are giving answers to them,” Gatsi suggested.
Going ahead, he considered there was the need to handle the Ghana currency as a long-term venture since the hypodermic injection of dollar by the Bank of Ghana into the market did not seem to be coming to a significant effect available on the market.
He requested control in the way factors were done so that traders would stop making use of the scenario to create more problems.
“There is the need for better information distribution about the economic system in order to restore the assurance within the temporary,” Gatsi mentioned.
However, Collins Appiah, Managing Director of Accent Financial Services, attributed the depreciation partly to the boost in business confidence, which was making importers go back into business after the election.
“It is the picking up of business confidence after the elections that is driving the cedi “Ghana currency” devaluation as importers who were going belly up due to high transfer taxation seemed to anticipate better leads under the new govt and so are coming back into company, thereby creating a greater need for foreign exchange,” Appiah described in a phone meeting.
He was however concerned that the craze was likely to stay for some time and so some actions needed to be taken to fulfill the growing requirements as Ghana’s economic system was confronted with the worldwide market.
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