Cedi not the 3rd strongest currency in Africa – IEA Director dismisses claims by politicians
Executive Director of the Institute for Economic Affairs (IEA), Dr John Kwakye, has dismissed claims by some politicians that the cedi is the third strongest currency on the African Continent.
Speaking at the Economic Dialogue Series on Metro TV monitored norvanreports on Tuesday, November 8, Dr Kwakye averred the cedi has the third highest value among its peer African currencies, but is not the third strongest currency in Africa.
Explaining how the cedi is the currency with the third highest value on the Continent, Dr Kwakye noted, the cedi’s value by way of the redenomination of the local currency in 2007 was artificially increased.
According to him, the artificial increase in the value of the local currency does not necessarily translate into a strong local currency.
“I want to first differentiate between a high-value currency and a strong currency, because I have some politicians say the Cedi is the third strongest currency in Africa.
“The Cedi has the third highest value in Africa but is not the third strongest currency, because you can create it by knocking off the zeros like was done in 2007, and today we can do same. But as to whether the cedi will be stable over time is what determines if it is strong or not,” he quipped.
Adding that, Ghana can only have a strong cedi is it industrializes like other nations such as the US, UK with strong currencies have done.
The cedi since the beginning of this year, has depreciated in value by close to 60% against the American dollar. The cedi currently hovers around GHS 14 to $1.
The dollar, for this year, is experiencing its highest appreciation since the year 2000. With more rate hikes by the US Federal Reserve on the horizon, the dollar is expected to further strengthen.
The high depreciation of the cedi against the dollar has earned it the infamous tag as the world’s worst performing currency.
On the African continent, the cedi is among the five worst performing currencies.
Nigeria’s naira leads the group of worse performing African currencies.
