Cedi’s performance under Akufo-Addo is best since 2012 – Bawumia
Vice President Dr Mahamudu Bawumia on Friday said the cedi’s performance against the country’s major trading currencies, in the face of pressures on the global capital markets, is due to prudent economic management.
Speaking at the launch of the School Entrepreneurship Initiative at the Ghana Senior High School (GHANASCO) in Tamale, Vice President Bawumia said the relatively resilient performance of the cedi was mainly attributable to the strong economic fundamentals of the economy arising from prudent policies being implemented by the Akufo-Addo-led Government.
The cedi appeared to be the star performer in emerging economies’ currencies against the dollar, and only the Euro and UK Pound appear to have performed better than the cedi against a resurgent US dollar.
“The macroeconomic performance shows quite clearly that Ghana’s economic fundamentals are strong, and we can withstand the temporary challenges confronting the cedi,” Dr Bawumia said.
Situating the cedi’s performance in context, Vice President Bawumia said: “The exchange rate of the cedi to the US dollar remained relatively stable when compared with movements in other currencies against the US dollar.
“The reason for this is because of the relatively stronger fundamentals.
“According to Bank of Ghana data, the cedi exchange rate increased from GH¢1.1 to the dollar at the end of 2008 to GH¢4.2 to the dollar (close to a quadruple increase) in 2016.
“Since we assumed office the exchange rate has increased from GH¢4.2 to the dollar to GH¢4.4 as at December 2017 and GH¢4.75 now.
“It is, therefore, clear that we have managed the exchange rate much better than our predecessors and also much better than many other countries this year”.
The Vice President attributed the relative weakness of a number of currencies, including the cedi, against the dollar, to measures being implemented by America’s Federal Reserve, emphasising that the recent policy rate hikes and normalisation in the United States had caused some shock spill-overs to many emerging markets, causing their currencies to depreciate at rates and magnitudes higher than the cedi.
The Vice President mentioned other currencies that had experienced challenges with the dollar as the Argentina Peso, which had depreciated by 50.2 per cent, the Turkish Lira by 42 per cent, the South African Rand by 19.2 per cent, the Indian Rupee by 11.2 per cent, the UK Pound by 4.29 per cent, and the Euro by 4.2 per cent.
Within the Ghanaian context also recent historical trends on the cedi’s performance show that the year-to-date seven percent depreciation of the cedi is the second best since 2012. BoG data indicates that the cedi depreciated by 17.5 per cent in 2012; 14.6 per cent in 2013; 31.3 per cent in 2014; 15.6 per cent in 2015; 7.9 percent in 2016; and 4.9 percent in 2017.
“With this, the lowest and second lowest depreciation since 2012 were both achieved under President Nana Akufo-Addo’s Administration in 2017 and 2018 respectively,” Dr Bawumia said.
However, the cedi had been quite stable against the Euro and the British Pound.
“The Cedi only depreciated by 2.7 percent against the UK Pound this year and 3.48 percent against the euro. This only goes to reinforce the fact that the strengthening of the dollar is the issue,” Dr Bawumia said.
Against this background, the Vice President expressed confidence that the attempt by political detractors to manufacture an exchange rate crisis, where none really exists, would fail.
“Propaganda is never sustainable in the face of the facts,” Dr Bawumia declared.
Speakers at a “Cedi Forum,” organised by Accra-based Joy FM at the Economics Department of the University of Ghana, on Thursday, corroborated the Vice President’s stand by saying that the current managers of the cedi have weathered the vagaries of a strong dollar in the face of unexpected global pressures.
Dr Ken Thompson, the CEO of Dalex Finance and a panellist, for instance noted that the “cedi depreciation is not a big deal.” This same view was held by the head of Treasury and Currency Management of the Central Bank, Mr Stephen Opata.