Vice Presidential nominee and current Governor of the Bank of Ghana (BoG), Paa Kwesi Bekoe Amissah-Arthur says the free-fall of the Cedi against major foreign currencies â€śis not untypical.â€ť
He told an Accra-based radio station that â€śI think that we have done quite tremendous work in stabilizing the Cedi as it is. As of now we are talking something like 17% depreciation year to date which, in an election year is not untypical.â€ť
Mr. Amissah-Arthur, who is expected to be vetted in parliament today, said as governor his priority was the stabilization of the economy.
He said some of the policies introduced under his supervision had brought the needed economic stabilisation.
The Vice Presidential nominee admitted the depreciation of the Cedi started â€śmuch earlierâ€ť this year than in previous election years and also said he was aware the depreciation of the cedi was going to be an election debate.
â€śThe problem this year was that it started much earlier than in previous election years and the political business cycle has been used as an explanation for some of the things that are happening.â€ť
He said, â€śI know that the record of the cedi will be an issue in this election but every election year in this country, from 1992 to date, the cedi has destabilized.â€ť
â€śReally if you look at the data, this is the year where it has been lowest. In other years, there has been 60 per cent depreciation, a 40% depreciation in an election year. So we have learnt lessons from those depreciations and not all of them are economic factors.â€ť
The daily depreciation of the Ghana cedi against major currencies has become a headache for economic managers of the country.
Statistics show that the cedi has lost over a third of its value since Ghana began producing oil in November 2010, trading currently at around 1.95 and 2.0 per dollar.
The cedi, which from January to June 2009, suffered a rapid monthly depreciation of about 3 percent, slowed down considerably to 0.9 percent in July 2009.
It bounced back in mid 2010 and remained relatively strong for some time. However, since January 2012, it has continued to depreciate against the major currencies.
While some analysts attributed the decline to the surging demand for the dollar and other currencies by both local and foreign investors, and businesses mainly to cover import bills others have blamed the currency weakness on trade with China, as many traders are accumulating actual paper cash in dollars due to the lack of effective transfer channels for the Yuan in Ghana.
Renaissance Capital has even predicted another 5% to 10% depreciation this year (the end of 2012).
To stem the situation, the central bank raised interest rates by 250 basis points starting from February to halt the currency from further weakening but critics of the government said measures put in place to stem the tide were not effective.
By William Yaw Owusu