On Tuesday, September 9, the Cedi was buying at 12.0440 to a Dollar and selling at 12.0560 per the rate from the Bank of Ghana (BoG).
The Pound was buying at 16.3148 and selling at 16.3323. The Euro was buying at 14.1535 and selling at 14.1663.
These rates indicate a further depreciation of the Cedi against the major trading currencies.
Analysts have been expressing their views on the Cedi’s performance.
For instance, a Financial Analyst and CEO of Dalex Finance, Mr Joe Jackson, said that stability in the exchange rate is not a measure of economic performance.
He made the point that although when the local currency is stable against the major trading ones, helping businesses to plan and to forecast, it is still not an indicator by which one can measure economic performance.
He further stated that in some cases, a strong currency is not even good.
Speaking on Citi TV Monday, September 8, he said, “The exchange rate is an important thing, but it is definitely not the measure of how well your economy is performing. The Chinese, South Koreans, and Japanese kept their exchange rate undervalued as a tool to create more exports and to draw in foreign direct investments.
“A strong currency has its problems. Talk to the Germans, and they will tell you some of the difficulties they are facing now is that the Euro is too strong.”
He added, “Exchange rate stability is good for businesses. As a business, if the exchange rate is stable, I am happy, I can plan, I can forecast, I can do all the right things. As an investor, exchange rate stability makes sense; as a financial institution, exchange rate stability makes sense, but the stability is still not a measure of economic performance.”
Assessing the Cedi’s performance over the past six months, Mr Joe Jackson said that “Indeed, when you look at what happened, the central bank was intervening in the market. So long as the Central Bank was intervening, the rates were around 10, 11.
“Then the Central Bank announced that it won’t intervene anymore. And as soon as it announced that it won’t intervene, what happened? The rate shot up from 10, 11 to the 12 plus.”
Jackson argued that the new level, above 12 cedis per dollar, is a “far more defensible position” for the Central Bank than the earlier 10.5 rate, which he said, although initially “feel-good” and bullish, reflected an over-valued cedi that could have posed long-term challenges.
“But it is my opinion that the rate of 12 plus is a far more defensible position for the Central Bank than 10.5. And that the 10.5, even though it had a really feel-good factor and everybody became bullish, over time because of how much the cedi was over-valued, would have brought us challenges,” Jackson added.
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Source:Lovinghananews.com
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