The Ghana cedis is highly depreciating which is affecting the economy of Ghana. Ghanaians are crying out to the president of Ghana about the depreciation of the cedi. One of the most important factors that contribute to the development of ecology is the strength of the cedis. The stronger the cedis, the stronger the economy, and vice versa.
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Ghana Cedis Depreciation
GH1.58 to the dollar at the beginning of the year, and the cedi increased to GH1.66 by the end of January 2012. By the conclusion of the first quarter, the cedi had crossed the GH1.7/$ mark, and by the end of June 2012, it had doubled to GH1.89/$.
Looking at the Dollar-Cedis exchange rate at the beginning of 2022, 1 Dollar was around 6.1 Cedis. Now in October 2022, 1 Dollar is around 15.1 cedis. This faster depreciation of the Cedis has led to a lot of confusion in the Ghana economy.
The Ghana cedi has declined in value in relation to the US dollar, the pound, and the euro by 37.5%, 24.1%, and 27.5%, respectively, in the year ending in September 2022.
Let see some factors that can cause a currency to depreciate before we look at why the Ghana Cedis is at a higher depreciation
Depreciation of a currency refers to a decline in its value when compared to other currencies. Economic fundamentals, interest rate differences, political unrest, or investor risk aversion are a few causes of currency devaluation.
Why the Ghana Cedis is highly depreciating?
According to Bloomberg, the decline in the currency is the result of increased demand for foreign exchange during a time when Ghana’s inability to access the global financial market for borrowing due to high debt levels and low investor confidence.
Effect of the Cedis depreciation
To lower the cost of their exports, some nations purposefully devalue their currencies. However, because Ghana’s export sector is not very established, the nation is unable to benefit from the devaluation of the Cedi by increasing exports and generating more foreign currency.
Due to the cedis’ higher depreciation, businesses in Ghana are finding it difficult to maintain a stabilized price. Prices of goods are increasing day in -day out. Things that were bought at low prices are now very expensive. Ghanaians have been accusing the president but the president does tell them, it’s not happening in only Ghana every country is facing the same problem.