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Business News of Tuesday, 12 February 2008

Source: GNA

Gold Coast Securities introduces Ghana Cedi Index

Accra, Feb. 12, GNA - Gold Coast Securities (GCS) Limited, an investment advisory and asset management firm, has introduced an index called GCS Cedi Index, which relates the new cedi to the four major international trading currencies.

A statement by the company on Tuesday said: "just as the Ghana Stock Exchange All-Share Index provides a general indication of the value movements of the Ghanaian Stock Market, the GCS Cedi Index in a similar way, provides a general indication of the international value movement of the cedi."

It said the rational was to further strengthen the country's growing financial sector for Ghana's accelerated growth by making available statistical measures that had much relevance for today's global economy.

The Index is a composite measure of the value of the Ghana Cedi against the Dollar, Euro, Pound Sterling and the CFA. It is calculated as a geometric weighted average of changes in the four foreign currency rates against the cedi at the Inter-bank market, relative to a base of 100 set at July 2007.

GCS said it chose July 2007 as the base period because of its significance in Ghana's currency history since on that date the Bank of Ghana redenominated the cedi, by knocking off four zeros and setting 10,000 of the old cedi to one new Ghana Cedi. Using the GCS Cedi Index at a specified time, a quote of 105.50 would mean that the cedi value has depreciated 5.50 percentage points since base year. Likewise, a quote of 98.20 would mean an appreciation of 1.8 percent points since the base year. The statement said the Index presented a holistic view of the performance of the local currency against the four major currencies, making it a better macro indicator than each of them considered in isolation.

It said in advanced countries, currency index was an important tool that aided policy makers in forecasting currency movements and in decision making. The statement said the Index helped Ghana's move to developing a commodity exchange and the introduction of futures, swaps and other derivative instruments.