The renewed depreciation of Ghana’s currency has been linked to the current energy crisis populary known in local parlance as ‘dumsor’
Cedi analyst Kofi Ampah told Joy Midday News that ‘dumsor’ is creating low business confidence which in turn is forcing businesses especially foreign investors to find “safe havens” for their dollars.
According to Kofi Ampah, the drying up of the dollar in the system “puts pressure on the cedi because demand will be going high for the dollar”.
Businesses fear that a renewed depreciation of the cedi after some stability last year is wrecking the operation of import-reliant businesses.
The Ghana cedi could soon hit 4 Ghana cedis against the US dollar. You are likely to get a dollar from the forex bureau at 3 Ghana cedis, 70 pesewas. In commercial banks, a dollar is likely to be sold at 3 Ghana cedi 60 Ghana cedis.
The fall of the cedi has reportedly resulted in a sharp decline of imports according to a businessman who spoke to Joy News.
A currency analyst says the stabilization experienced last quarter of 2014 was always going to be temporary. He cited a Bank of Ghana report which predicted a fall of the cedi in the first quarter of 2015.
Some government intervention last year slowed a fast-falling currency that had lost about a third of its value by the end of 2014.
Ampah believes that the power crisis “ has brought a lot of low business confidence and when it happens like that a lot more of these businesses especially foreigners might be engaged in capital flight and that is exactly what is happening. A lot of investors are looking for safe haven”.
He explained that one of the cures for cedi depreciation is exports but wondered how aggressive businesses will be in exporting when there is no reliable power for business.
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