Businesses express concern over Cedi’s depreciation against dollar
The sharp decline of the Ghanaian cedi against major trading currencies is causing significant concern among businesses in Ghana.
According to Dr. Mark Badu-Aboagye, the Chief Executive Officer of the Chamber of Commerce, the current economic climate is particularly challenging due to the cedi’s depreciation and the resulting high operating costs for businesses.
“This is not a good time for businesses at all, the rate of depreciation of the cedi and high cost of operating are troubling,” he quipped.
The cedi is experiencing a historic weakening, having not gained against the U.S. dollar in the past 22 trading sessions, a record streak according to Bloomberg data dating back to 1994.
As of May 16, the cedi had weakened by 0.3% to GHS 13.9310 per dollar in London trading. Over the year, the cedi has slumped by 14%, a decline outpaced only by devalued currencies such as the Egyptian pound and the Nigerian naira.
Several factors are contributing to the cedi’s slide. A significant decrease in cocoa earnings—down nearly a third to $508 million in the first two months of the year due to adverse weather, disease, and fertilizer shortages—has severely impacted the economy.
Furthermore, despite a temporary current account surplus in 2023, Ghana’s persistent historical current account deficit has resurfaced, posing additional challenges to the cedi’s stability, as noted by Gergely Urmossy, an emerging market strategist at Societe Generale.
Forecasts indicate that the cedi will continue to weaken, with forward calculations predicting it could hit a record low of GHS per dollar by the third quarter of the year and end the year at approximately GHS 15.98 per dollar.
In response to the currency’s poor performance, former Minister of State under the Rawlings administration, Kojo Yankah, has urged the government to focus on providing incentives for businesses to boost production rather than imposing new taxes.
He argues that additional taxes during a time of currency depreciation only further burden the business community, which is already struggling with the economic downturn.
