Financial Analysts are predicting that the Cedi will weaken by about 5 percent against the US dollar by the end of the year.

Despite picking up at the beginning of this year, Analysts say the cedi has been experiencing some level of depreciation lately.

Last year, the Bank of Ghana (BoG) put in a number of measures to protect the cedi from further depreciation.

However, the cedi is likely to trade at 2 per dollar by the end of this year according to projections.

Sammy Ampah of Gold Coast Securities told Citi Business News what is accounting for the depreciation saying, “what we have heard or experienced is that some investors have been repatriating their funds or investments from the country. For most of the bonds that we have issued, the participants are mostly foreigners and when it happens like that, when an investor with the bonds wants to take away the money, definitely it puts pressure on the cedi.”

He added that “such redemption puts pressure on the cedi not taken care of within the year or within the period where an investor decides to take his money before the maturity of the bond. That one puts pressure because government has not made preparation for such huge redemptions within the year. So this definitely affects the foreign exchange stability.”

Mr. Ampah further explained that there are a lot of businesses that are looking to maybe re-stock and so definitely, “we will have a lot more imports. We are in the country where about 80% of what we consume is imported. Definitely you will have some volatility because there will be high demand and what really causes depreciation or exchange rate depreciation is demand being high and supply being low. So when there is imbalance to that effect, you will have a higher rate being quoted.”

So what will be the implications? 
It is very drastic on importers because definitely, prices of goods and services will go up and by that, it is also not going to be good for our investing environment.

“Investors will also have to suffer a little more because If they are looking for the dollar in the country where they have invested and maybe want to take some money out they are going to get at a higher exchange rate and definitely, it affects the economic balance of this economy and that is not good at all. You will have more traders complaining

You have manufacturing sector complaining because their goods, their raw materials will go up. It will have a dire effect on the general community in terms of pricing,” he said.


By: Vivian Kai Mensah/citifmonline.com/Ghana

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