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Company News of Friday, February 1, 2019
Source: thebftonline.com
2019-02-01
The cedi is depreciated by 11% between last January and the same period this year
It's time for the government to focus on policies that encourage the production of goods that the country can, while adding value to exports as a sustainable way to reduce imports and strengthen the local currency, badysts said financial and economic.
The cedi currently exceeds GH ¢ 5 to one dollar from US $ 4.42 for the same period last year and to US $ 4.27 in January 2017 – a situation that many fear will worsen if long-term measures term are not put in place.
This essentially means that the cedi has depreciated by 10.6% against the US dollar since January 2018.
Professor John Gatsi, head of the Finance Department of the University of Cape Coast (UCC), told B & FT that until economic managers focus on long-term policies to reduce the import of products easy to manufacture in the country, the cedi woes will never stop.
"The Bank of Ghana's report indicates that rice imports have increased to US $ 300 million, while sugar imports have also increased to US $ 123 million. We already have policies to reduce rice imports; we already have policies to reduce sugar imports in the form of the Komenda Sugar Factory. This means that we do not implement policies that should limit the demand for certain products.
"We also know that some agricultural products are part of the products we import into this country. So the question is: what is our agricultural policy doing? Where is it headed? It should be focused on sustainable food production and key import management that we have the ability to produce. But it seems that we are not managing the agricultural sector as part of the policies to fight the depreciation of the currency, "he said.
He also denied that the local currency was suffering from external shocks, particularly the strength of the US economy, saying that if the country focused more on the things it controlled, the impact of external shocks would not feel.
"Although we can explain this with factors such as the performance of the US dollar, the fact is that most countries trade with the US dollar, but their currencies do not depreciate like the cedi. We must take into account the factors over which we have control; and after that, we will see that international developments have minimal effects on our economy, "he said.
His point of view is also shared by Peter Quartey, professor of economics at the University of Ghana, who said that the depreciation of the currency was due to excess demand for over-supply of foreign exchange, mainly because of the high level of imports.
"There is excess demand on the forex supply. And what explains this is that our imports continue to be a challenge: we tend to import a lot.
"A sustainable way to manage the exchange rate is to export more value-added products, not raw materials. We need to add value to all things we export, such as cocoa, gold, etc., before exporting them, "he said in an interview with B & FT.
He further urged the central bank to enforce its regulation on forex trading, saying that any efforts to remedy the depreciation would be in vain if forex trading was not properly regulated.
"[In Ghana] you can walk around any corner and exchange money without any piece of identity. In most countries, you can not do that. you need a pbadport or a piece of identity to do it. But in our case, people come from neighboring countries and come to load their dollars in suitcases and go away.
"So, if we do not solve this problem, no matter how many pumps are pumped by the Bank of Ghana, there will be a leak. I have heard that the Bank of Ghana has started, but I wish to see more effort, "he said.
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