Vice President Paa Kwesi Amissah Arthur has called for the devaluation of the cedi alongside other currencies in the ECOWAS sub-region as a condition to allow Central banks meet the key criteria for adopting a single currency by 2020.
According to him, ECOWAS member countries would benefit if they devalue their currencies since that would ensure stability and lead to the creation of a single currency, the ECO, for the sub-region.
He was speaking at the 35th Meeting of the Convergence Council of the West Africa Monetary Zone.
“We need to design a stability mechanism, create a banking institution, strengthen fiscal regimes in member countries and improve information sharing and surveillance within the West Africa Monetary Zone,” he indicated.
The Vice President said devaluing the currencies would be one of the ways by which sub-regional leaders could confront dogmatic thinking and become innovative.
Government appears to be totally confused as to how to resolve this problem since the prices of goods and services keep rising by the day.
Standard Chartered Bank predicted a GH¢4.20 rate depreciation against the U.S dollar by the end of 2015.
The bank’s head of Africa research, Razia Khan, gave the outlook for eight economies in Africa, including Ghana, Nigeria and South Africa.
But it ended close to GH¢4.00 by end of year.
Currently, the cedi is trading around GH¢4.00 to a dollar.
In December 2008, $1.00 was sold at GH¢1.10. In June 2009, $1.00 was selling at GH¢1.40, in December, 2010 $1.00 sold at GH¢1.47 and then in December 2011, US$1.00 sold at GH¢1.64. In June 2012, $1.00 sold at about GH¢1.95. Thus between December 2008 and June 2012, the value of the cedi relative to $1 had fallen by 77.3 percent.
Effects on importers
Businesses that import goods into the country suffer tremendously from the depreciation of the cedi in several ways.
It adversely affects their working capital and renders them bankrupt.
By Samuel Boadi