[ 2016-12-06 ]

Cedi to depreciate even further - Dr. Lord Mensah
Economist Dr. Lord Mensah is predicting a further
depreciation of the cedi ending the year beyond 4
cedis.

According to Dr. Lord Mensah the festive season is
likely to see the cedi depreciate as demand for
the currency by traders is increasing for the
short-term trading during the festive season.

He also asserted that, the recent auctioning of
the cocoa syndicated loan proceeds by the central
bank was to also an avenue see cedi depreciate
considerably.

The Central Bank has hinted of tightening its
monetary policy to stabilize the cedi.

According to figures from the Bank of Ghana the
cedi has depreciated by 4.3 percent as at November
18, 2016 compared to 15.5 percent as at October
2015 in the corresponding period of 2015.

But Speaking to the thebftonline.com Economist and
Senior Lecturer at the University of Ghana
Business School Dr. Lord Mensah said currently
supply outstrips demand for dollars which is
expected to see the cedi depreciate beyond 4 cedis
50 pesewas.

“Let me say that, projections need to be backed
with data and current data available shows that
the Cedi is likely to depreciate further ending
the year at GHC4.50. This is because signals from
the market, shows higher demand for the dollar to
pay for orders of goods to be imported into the
country for the festive season and first quarter
of 2017.”

“You know the auction process using the cocoa
syndicated loan by the central bank is also going
to sway the cedi exceeding the 4 cedis mark
earlier projected. All this is likely to impact on
the cedi negatively causing it to depreciate
further against the dollar and other major trading
currencies,” he added.

Dr. Lord Mensah’s assertion was because,
commercial banks in the country were likely bid
above current trading of the cedi to the dollar
which was 1 dollar to GHC3.95 during the
auctioning of the 1.8 billion dollars cocoa
syndicated loan in three tranches of 20 million
cedis to the tune of 60 million before the close
of the year.

Meanwhile the Governor of Bank of Ghana (BOG) Dr.
Abdul Nashiru Issahaku had earlier rejected claims
that the cedi was likely to see further
depreciation heading into the elections and
festive season.

Dr. Abdul Nashiru Issahaku maintains the cedi in
recent times has shown remarkable strength against
the dollar and other trading currencies.

Latest data from the same central bank reveals
that the cedi, as at November 18, has depreciated
against the USD by 4.6 percent, the highest in
2016.

The thebftonline.com checks on the market reveals
that, the stress on the local currency could be
down to seasonal demands ahead of Christmas
festivities and/or the work of speculators who
want to cash in on the uncertainties surrounding
the December 7 polls.

West Africa’s worst performing currency; the
Ghana Cedi has been projected to depreciate by
about 5 percent this year. This means it will
trade at 4 cedis 50 pesewas to a dollar by the end
of December.

However, the performance of cedi against the
British pound has been has been remarkable with
the local currency gaining on the pound by 13.7
percent as at November 17.

The cedi holds a similar success story against the
Euro, depreciating by just 2.4 percent within the
period in review.

Source - The Business & Financial Times

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