Businesses demand explanation on cedi

Bussiness leaders have asked the government to explain the sudden appreciation and depreciation of the cedi in less than a month.
According to them, the cedi’s sudden depreciation after the rebound in early July this year showed that the central bank misled Ghanaians about its decision to inject US$20 million per day into the market.

They have therefore challenged the Bank of Ghana (BoG) to employ prudent approaches to stabilise the cedi in order to rescue the private sector from imminent collapse and help boost business confidence in the economy.

The President of the Ghana Union of Traders Association (GUTA), Mr George Ofori, and the General Secretary of the Industrial and Commercial Workers Union (ICU), Mr Solomon Kotei, told the GRAPHIC BUSINESS in separate interviews in Accra.

Cedi loses strength

The local currency that started a successful appreciation of about 21 per cent within a month against the major foreign currencies is back on the path of depreciation once again.

The dollar which appreciated to 3.3 a dollar in July 14 this year has now rose to 3.6 on August 4, 2015, while the British pound which was exchanged for GH¢5.2 is now going to GH¢5.6 during the same period under review.

The euro has also depreciated from GH¢3.6 on July 15, to GH¢3.9 on August 4 this year, Bank of Ghana (BoG) daily interbank forex rates.

Toll on businesses

Mr Kotei noted that consistent depreciation of the cedi against the major foreign currencies coupled with the energy crisis and increased taxes had made it difficult for businesses to thrive in the current economy.

“Indeed, the private sector is reeling under uncertainty in the value of the cedi against major foreign currencies as this affects business planning and consequently causing losses to many businesses,” he said.

Effect on consumers

The President of GUTA however said prices of goods and service would not be reduced because importers had already imported goods as far back as five months ago pegged at the previous cedi to dollar rate, therefore, reducing would affect their working capital and profit.
“So we are observing the trend of the cedi for some time and prices of goods and services will be reviewed accordingly,” Mr Ofori added.

Possible solution

The President of GUTA was of the view that if the government would quickly cut its expenditure and excessive borrowing it would save the economy from further deterioration and restore business confidence. — GB

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