Cedi Depreciation caused by Ghana’s Export of Air

The Cedi continues to depreciate against foreign currencies and efforts to stabilize it have not yielded the desired results. According to Daniel Dadzie during a discussion on Joy FM’s Super Morning Show, Ghana cannot stabilize the cedi against major trading currencies because all we export as a country is “Air”

The reality is that, each time Ghana imports, so much in brought into the country in containers however, most of the containers that bring these imports leave the shores of Ghana empty. The basic science fact is that, an empty container is occupied by air.

The lack of industries to process many of the raw materials produced by farmers is worth looking at. Government’s plan of establishing one factory in each district if implanted to the letter will go a long way to increase Ghana’s export and bring in the needed foreign earnings which will help stabilize the cedi.

Ghana, therefore, needs to increase her exports of value-added resources so as to earn enough foreign exchange to take care of the difference and shortage within the economy.  

In a related development, Mr Ken Thompson has called on the media to put pressure on the ministers of Agric, Trade and Industry, and Ghana Export Authority. He called on the media to quiz them as to what they are currently doing to ensure, the containers do not leave the shores of Ghana empty.

He holds the view that, the best indicator for measuring the performance of government should be the percentage of export of the country.

Ghana’s Cedi Depreciation headache is that we import everything from toothpick, to sponge. Ghanaians are so much interested in buying and selling instead of producing or manufacturing.

Today 1 dollar is exchanged for GHS 5.28. On a daily basis the Ghana cedi continues to depreciate making it difficult for business, importers and government to transact international business without losing.  

Sadly it is importers who are at the losing end in the face of the Cedi Depreciation with the continuous downward trend of the Cedi against the dollar and the pounds sterling. The short supply of the foreign currencies also means that, traders of the currency increase their margin or spread while selling.  

One sure way to stabilize the depreciating cedi is to reduce inflation within while ensuring we do not import inflation from other countries.

Our goods and services are likely to become attractive in terms of price if we are able to reduce the rate of inflation because the lower inflation rate has the tendency to appreciate Ghana’s cedi in the not distant future. This can be attained through well thought of monetary and fiscal policies by the bank of Ghana while we also deal with the supply side policies.

The Cedi Depreciation will continue until Ghana is able to tame it for Good.