We’re not out of the crisis yet – Miracles Aboagye on Cedi depreciation

Dennis Miracles Aboagye, the Director of Communications for the NPP 2024 Campaign, has said that the Ghanaian economy is facing extreme crises that are far from over, resulting in the continued depreciation of the local currency.

According to him, the interventions government put in place impacted the Cedi, resulting in the instability of the local currency against major trading currencies.

Currently, the dollar is selling at GHC14.85 at the Forex bureaus. It is anticipated that it could reach GHC15.00 by next week.

However, the government managed to bring the cedi down to GHC10 to the dollar around November 2022.

Also, despite the amount of money injected into the economy through the IMF bailout and World Bank budget financing, the cedi appears to have not stabilised over the long term.

“You put in an intervention in November 2022 you need about 400 million dollars every month to buy crude so it puts pressure on your currency. Then you bring in an intervention, which reduces the need for that 400 million [dollars] to 200 million, very significant.

“Then all of a sudden you encounter crises that are beyond you…the crisis that all of us are trying to get out of is not over, I just mentioned the China situation to you…today if you buy something from China, the route that it uses that is where the Iran-Israeli tension is mounted so now they are using a longer route.

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“If they were charging you 1000 dollars, they are now charging you 2000 dollars..if you spend 1000 dollars more than what you spent last week, you will increase your prices,” Miracles Aboagye explained in an interview on Accra-based Starr FM.

Meanwhile, economist and professor of finance at the University of Ghana, Godfred Bokpin, has observed that the cedi will witness short-term stability and continue depreciating again.

Responding to whether the Cedi will witness some long-term stability, he said, “It will take a rest and then it will continue to depreciate.”

“There will be relative stability and then the depreciation will continue. That has been the pattern of the Cedi since it was introduced in July 1965. Even if we did everything, we still expect that the Cedi will depreciate by a certain margin given the relative strength of our economy, given the other economies that we interact with and that will only be consistent with the objective of price stability.”

He further underscored that the managers of the economy have not significantly improved the macroeconomic indicators over the years, contributing to the continued fall of the currency.