Cedi depreciation a reflection of weak economic fundamentals – Economist

Economist, Professor Godfred Bokpin has said the persistent depreciation of the cedi against the US dollar is a reflection of weak economic fundamentals. He argues that the performance of the cedi also depicts the imbalances between demand and supply along with a lack of confidence and speculation in the economy. “The cedi just doesn’t misbehave on its own. It is a reflection of the fundamentals, it’s a reflection of imbalances between demand and supply. It is a reflection of lack of confidence in the economy and some speculation in the economy because the cedi so far is no longer a store of value,” Prof. Bokpin is quoted by Citinewsroom.com Touching on how the situation can be addressed, the Senior lecturer at the University of Ghana Business School called for urgent action to be taken to contain the persistent cycle of depreciation. “Some kind of active intervention that suggests that we are uncomfortable with the depreciation [is needed]. No one likes uncertainty. Everyone loves predictability. Price stability is at risk. Credibility around Bank of Ghana’s own short-term price stability objective is at risk. So, we need to restore these by bringing everyone on board.” “Government needs to build that consensus by looking at data from different angles. They need the buy-in of the opposition and organized labour across the country because implementing any programme affects everybody else, it will cause social unrest. Sometimes, the social adjustment costs are not evenly distributed and may affect those at the end of the income structure, so a good way to do this is to carry the whole nation along,” he explained. Meanwhile, the woes of the Ghana cedi in the first 10 months of this year continued as it has seen its value decline by over 50 percent to the US dollar. The situation, according to a recent Bloomberg tracking saw it ranked as the worst-performing currency in the world against the US dollar. This has forced many businesses to collapse, culminating in worker agitations, and discontent over government policies, among others. MA/FNOQ Watch the latest episode of BizTech below: