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Blame External Shocks For Cedi Depreciation – Ofori-Atta

Finance Minister, Ken Ofori-Atta Thursday blamed the depreciation of the cedi against major international currencies to “external shocks.”

 

 

The Ghanaian cedi hit a record low earlier this month, with Reuters noting that the cedi has weakened since the beginning of May, trading at GH¢4.8250 to the dollar.

 

Cumulatively, the local unit depreciated by 5.3 per cent in the first six months, compared to 3.3 per cent in the first half of last year despite significant increments of weekly dollar sales to local banks in the country.

 

The depreciating of the cedi was a major issue in the 2016 general elections, with governing New Patriotic Party (opposition then), criticizing the Mahama administration for poorly handling the economy when they were in power.

 

Vice President Dr. Mahamudu Bawumia at the time incessantly teased former President John Mahama for appearing clueless in halting the depreciation of the cedi.

 

Mr. Mahama hit back last month, complaining about the cedi to dollar exchange rate, which he said stood at GHc4.7 to $1. Also the deputy Minority Leader James Klutse Avedzi last week predicted doom for the cedi tasking Dr. Bawumia to focus on arresting it from free-falling.

 

Presenting the mid-year fiscal policy review of the 2018 budget in parliament Thursday, Mr. Ofori-Atta observed “despite the strong fundamentals, we have seen the cedi come under pressure primarily due to external pressures.”

 

According to him, however, “aside of the short transitory volatility recorded in June this year, the average performance of the [cedi against] the dollar has been one of the best in recent years.”

 

Speaking amidst heckles and support from the Minority and the Majority side of the lawmaking chamber, Mr. Ofori-Atta asserted that “the performance of the Ghana cedis during the 18 months of the Akufo-Addo government has been impressive if compared to the last six years.”

 

“These are the facts, the year-on-year depreciation of the Ghana cedi against the US dollar stood at 4.9percent in 2017. It was 9.7percent in 2016, it was 15.7percent in 2015, it was 31.3percent in 2014, and 17.5percent in 2013,” he stated.

 

A further interrogation of the data by the Bank of Ghana, he stated showed that the depreciation of the cedi in the  first half, that is six months of 2018, has been the best since 2012.

 

“It is instructive to note Mr. Speaker that from January 2018 to June 2018 the cumulative depreciation of the Ghana cedi against the dollar was 2.4percent as against 17.2percent in 2012, 3.3percent in 2016 and 3.7percent in 2017. If this is anything to go by, it means that the 2018 performance of the Ghana cedi is likely to better than even the 4.9percent we experienced in 2017, which was an all-time low compared to the four years of the Mahama administration,” he stated.

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