The year started with cedi appreciating contrary to what was being predicted by known economists considering the fact that we are in the election year. Election year normally comes with huge expenditures on campaign and political parties paraphernalia and that contributes to the depreciation of the cedi. The cedi appreciated in the first two months of the year and thereafter began to dwindle again. One may want to know the reasons behind it.

This is as a result of the resurgence import after lockdown. Many producers, manufacturers, suppliers, and businesses were out of stock, not producing during the lockdown. After the lockdown was lifted in Ghana the backlog of raw materials, finished goods that were necessary for business should be imported. Again Chinese exporters reducing the prices for all these goods needed by producers, manufacturers, suppliers, and businesses in Ghana has increased imports to Ghana and exports for the Chinese exporting firms.

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Producers, manufacturers, suppliers, and businesses in Ghana want to make up for the lost market, revenue, profits and has brought about the influx of imports. This is one of the reasons why the straighnewsonline business desk thinks the cedi is losing weight to the dollar.

The US Dollar appreciated by 1.01 percent to sell at GHc 5.60 on the interbank currency market on Monday, May 4, 2020. The depreciation of the cedi up to date has increased to 1.20 percent.

China’s exports rise is not only to Ghana but to the rest of the world. A source reveals that China’s global export rose by 3.5% in April 2020.

 

This inevitably means that when China was not exporting to Ghana in January and February it contributed to the appreciation of Ghana’s cedi during China’s lockdown.

There are two recommendations I want to make.

First, the Ghanaian business fraternity should restrategize to produce locally to feed local demand and markets. This means that the government should give the enabling environment to do so by giving tax holidays, subsidies to certain products and businesses which takes a lot from Ghana’s imports.

Second, the Bank of Ghana should come out with a reduced prime rate to encourage more potential manufactures and producers to go for loans for specific businesses like poultry, etc. Poultry products imports alone in Ghana annually is over $200 million.

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