Cedi depreciation: we have fixed the fundamentals – Oppong Nkrumah

Minister of Information designate, Kwadwo Oppong Nkrumah says the government has fixed the fundamentals of the economy to sustain the strength of the cedi.

According to him, one of the traditional causes of the cedi depreciation which is lack of dollar reserve makes people panic to buy more dollars than they usually need.

Vice President, Alhaji Dr Mahamudu Bawumia had earlier said the cedi has never been better in the last eight years.

Although the cedi is trading close to 5 cedis to a dollar and more than 5 cedis on the black market, the Vice-President seen as the government’s economic czar, explained the rate of depreciation is much slower than previously.

Comparing data from 2012 to 2018, Dr. Bawumia said the cedi recorded 17.5% in 2012, 14.6% in 2013, 31.3% in 2014, 15.6% in 2015, 9.6% in 2016 and 4.9% in 2017.

Criticisms have come from the opposition, the Ghana Union Traders Association (GUTA) and some members of the NPP including MP for Assin Central, Kennedy Ohene Agyapong who has accused Dr Bawumia of being a “talking book” who has failed to address the real issues on the ground.

But speaking on Adom FM’s Current Affairs show, Burning Issues, Mr Oppong Nkrumah the cedi’s situation on the United States (US) government increasing interest rate which has caused people to withdraw their dollar reserves back to the US so they can earn high interests.

According to him, reports that the dollar is going up is causing people to rush and purchase same and save for future use which increases the price when supply does not meet the demand, making the reports “a self-fulfilling prophecy”.

Mr Oppong Nkrumah has also pointed at the banking sector crises which is being resolved as also being responsible for the misconception that people are going to lose their monies.

These, according to the Ofoase Ayirebi MP, make people withdraw their savings and convert them to dollars.

He says the US pressure has depreciated a lot of currencies across the globe with “Argentina falling by 50.23 per cent, Turkey by 42.3%, South Africa by 19.24%, India by 11.27% , the British Pound by 4.29% and the Euro almost 4%”, meaning the cedi has performed relatively well by reducing at 7% to the dollar.

The former deputy Information Minister, however, indicated the government is putting measures in place to resolve the situation.

“Firstly, BoG is increasing the supply enough to meet even the increased demand particularly from the US market, secondly, we must properly explain for those who don’t understand to understand so that people would know there is enough reserve to meet the demand to prevent the panic withdrawal resulting from resolving the banking crises”, he said.

Meanwhile, Greater Accra regional Chair of GUTA, David Amoateng, speaking on the same show asked the government to check the operations of the black market which has also contributed to the performance of the cedi.

Mr Amoateng said the black market operators do not follow the BoG approved forex rates which is a key contributor to the problem.

Source: Adomonline

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