News | 2009-2019: How Ghana's Finance Ministers promised to fix the dollar rate

2009-2019: How Ghana's Finance Ministers promised to fix the dollar rate

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There has been a chronic depreciation of the Ghanaian cedi for years.

It is worth noting that there are external and domestic factors which cause the cedi to depreciate against major trading currencies.

The performance of the cedi against major trading currencies was a major campaign issue with both the NPP and NDC trying to topple the other with claims for and against the performance of the cedi.

The NPP government, now the ruling government, has allayed fears that the economy could crumble as a result of the gradual depreciation of the cedi against the US dollar.

Some economists, members of the opposition National Democratic Congress (NDC) and many Ghanaians, have criticized the government for failing to fix the cedi's fall and legislating policies to weaken the cedi – a stance Vice President Dr Bawumia Bawumia rejected.

Ken Ofori-Atta on cedi

Finance Minister Ken Ofori Atta largely blamed the cedi's depreciation on the strength of the US dollar and said other currencies like the pounds were also struggling against the US dollar.

READ MORE: No government has permanent solution to the economic problems in Ghana – Economist

He described the decline in economic growth as a global catastrophe which in his estimation the Nana Addo administration has managed very well.

He cautioned Ghanaians against labelling the local currency as the "weakest in Africa" and assured that the cedi will stabilize in the next few weeks.

Ken Ofori-Atta

He said the ailing cedi will regain its strength, latest in a fortnight adding that the fundamentals of the economy are still strong.

"The truth of the matter is to look at the fundamentals of this country. Inflation is at a single digit which is good. Growth has been strong. The budget deficit has gone down and we are getting surpluses. I’m confident of the revival and stability of the cedi," Ken Ofori-Atta said.

"Really I am very confident that a reversal is going to occur and that it [cedi] is going to be pretty stable going forward. We have about 200 million dollars coming in from COCOBOD and another 600 million from COCOBOD in a month or so. And that should close within the next weeks. With the type of capital that we expect in the few weeks we really expect a reversal and a stability," Ken Ofori-Atta told journalists in Accra.

Seth Terkper fights cedi depreciation

The cedi depreciated against the US dollar by 8.3 per cent during the first quarter of 2012, compared with two per cent depreciation in the same period in 2011.

From 2012 to 2014, the cedi has depreciated incredibly by 77 percent against its main trading currency, the US dollars. In 2012, one US dollar fetched a mere GH¢1.64, but by 2014 this amount had shot up to GH¢2.60 to one US dollars.

In January 2014 alone, the cedi's strength against major currencies dropped by 3 percent and 17 percent against the US dollar from about GH¢2.40 to GH¢2.60 to one dollar.

Former Finance Minister Seth Terkper

In 2015, Seth Terkper, gave the strongest assurance that the falling cedi will appreciate against the major foreign trading currencies before the close of the year.

He based his assurance on expected inflows from the sale of another Eurobond ($1 billion) and a syndicated loan for cocoa purchases for the next crop season, expected to be above US$1.5 billion.

READ MORE: Ghana needs IMF now; don’t exit – Seth Tekper to gov’t

The cedi traded at GH¢3.23 to US$1 in January but shot up to GH¢4.32 to US$1 as of the end of June 2015.

The cedi was GH¢4.9 to £1 in January but reached GH¢6.9 in June, while GH¢3.7 was exchanged for one euro in January but traded at GH¢4.8 to one euro by June 2015.

Since the beginning of the month of June, the cedi fell by about 26 per cent against the dollar, but Terkper described the decline as seasonal, although it has been made worse by what he called the "greenback's strength."

Kwabena Duffuor

Former Finance Minister, Kwabena Duffuor who served under the late Atta Mills-led administration admitted the cedi had been sliding consistently. Ghana's cedi hit fresh lows during his time, relating to the strong dollar demand by local manufacturing and telecom firms.

Kwabena Duffuor

"We've begun implementing the latest measures and I have hope that the situation will change soon. By the middle of this month, we'll see the cedi stabilise against the dollar," Kwabena Duffuor told the Reuters at the time.

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By Kwame Ntow 15/03/2019 05:19:00