Businesses clamour for stable currency
Exactly a week into the administration of the new government, businesses are clamouring for urgent measures to stabilise the Ghana cedi against the major foreign trading currencies, particularly the United States greenback, to enable them to effectively plan their activities over longer periods.
The fast depreciation of the Ghana cedi over the years created a lot of challenges for businesses, particularly, importers of raw materials, as it affected their projections and threw their financial plans out of gear.
For instance, the Ghana cedi, according to the Monetary Policy Committee (MPC) report of the Bank of Ghana (BoG) for November last year, depreciated by 22.7% against the US dollar, 22.4% against the British Pound, and lost 19.1% of its value to the Euro.
Although the interbank exchange rate was hovering at about GH¢14.78 on the average to a dollar by the close of last year, the scenario was completely different at the forex bureaux and the black market where demand was more assured as the dollar sold for more than GH¢15.5 on the average.
It became obvious that much as the BoG intervened in the markets by supplying dollars to the banks for easy access by importers, businesses had a tough time accessing the greenback, a development some analysts attributed to the existence of the black market where the US dollar and other foreign currencies are traded openly on the streets and in the full glare of authorities.
Predictability
President of the Ghana National Chamber of Commerce and Industry (GNCCI), Stephane Miezan, told the Graphic Business in an interview that the stability of the local currency was of priority to businesses, and expressed the hope that in his pledge to ensure economy restoration, President John Dramani Mahama would critically work to ensure the cedi’s stability.
Mr Miezan said businesses wanted predictability as that would help in their planning and proper forecasting.
At the core of his vision for economic recovery, President Mahama, during his inauguration as the new president of the Republic of Ghana, unveiled the following priorities among others: Economic restoration and stabilisation; and Improvement of the business and investment environment, a commitment businesses have lauded as refreshing and a mark of hope, revival and reassurance.
Mr Miezan said the GNCCI was ready to work with the government to ensure economic recovery and looked forward to a meeting with the President to enable them to determine the way forward.
Shipping lines
Another core source of worry for businesses, Mr Miezan said, was the issue of the charges at the ports by shipping lines.
“One other critical issue we want President Mahama to consider is the manner to which the shipping lines charge businesses, particularly importers of raw materials meant for production of goods.”
They charge by pegging the Ghana cedi to the US dollar using their own rates instead of using the interbank rates published officially by the Bank of Ghana,” he said.
The GNCCI president described the development as worrying because the rates determined by the shipping lines keep changing too frequently and that makes it difficult for the importers to financially plan.
Mr Miezan again described the phenomenon as unfortunate because of its impact on those affected and also against the official figures from Ghana’s central bank which has the sole right to determine the rates officially.
Rebound
Although the Ghana cedi closed the year at a monthly average of GH¢14.78 to the US dollar at the interbank level, it marks the beginning of a rebound as compared to previous months where the Ghana cedi hit GH¢16.5 on average to the US dollar.
BoG at its last MPC meeting said the cedi’s rebound observed recently should continue with the dissipation of election-related uncertainties and the improved foreign exchange buffers accumulated by the central bank.
It explained that a combination of economic uncertainty brought about by the elections and the high demand for foreign exchange towards the Christmas festivities, led to an exchange rate path that slightly deviated from the fundamentals.
BoG was, however, optimistic that with strong macroeconomic policy implementation and improved foreign exchange availability, the economy should observe a realignment of the trajectory of the exchange rate with the fundamentals.