Businesses want government to sustain efforts geared at stabilizing the cedi to foster growth.
Following what they say is the relative stability of the local currency, the businesses fear they will be worse off should the minimal gains be eroded.
A cross section of businesses that Citi Business News has been engaging in a review of the performance of the cedi for the first half of the year point to a positive gain for the period under review.
The CEO of Ghana Home Loans, Dominic Adu tells Citi Business News the company’s cedi mortgage rate has dropped by 44 percent due to the phenomenon.
“If you were to ask us in December what our cedi mortgage rate would have been, I would have told you about 33-36%. As we are speaking, we are talking about say 18-20%. So there has been a significant impact on our cost of taking a mortgage with us which has come down almost close to half.”
BoG data indicates marginal drop in depreciation
Available data from the Bank of Ghana shows that as at the 19th of July, 2017, the cedi had depreciated by 3.9 percent to the dollar while depreciating by 8.7 and 11.8 percent to the British Pound and Euro respectively.
But a year on year analysis of the cedi’s performance shows that the local currency had depreciated by 3 percent to the dollar between July 2016 and the same period this year.
The depreciation went up marginally from 3.8 to 3.9 percent.
In relation to the British Pound, the cedi depreciated to 8.7 percent almost double the rate of appreciation of 8.9 percent in the same period last year.
The Euro on the other hand witnessed a substantial rate of depreciation within the twelve months’ period.
The cedi’s deprecition more than doubled; from 5 to 11 percent.
With the dollar recording the least rate of depreciation, businesses are optimistic of its impact on their operations.
The Association of Ghana Industries’ (AGI’s) second quarter business barometer report indicated that the cedi depreciation came as second least of the top five challenges facing businesses within the quarter under review.
The AGI’s President, James Asare Adjei believes the government could do more for their members.
“Those who are in industry, those who are in other areas of businesses would attest to that fact against the background of a relative stability in exchange rate for well over three four months there have been some seeming stability in our currency,” he stated.
Currency analysts explain
But explaining the underlying reason for this, the General Manager for Treasury at HFC Bank, Joseph Nketiah cited the proceeds from the 2.25 billion dollar bond issued in April as a major contributor to the increase in dollar supply.
“When the government issued the almost 2.5 billion dollar bond, it was a cedi bond but it was paid in dollar that really increased our foreign exchange reserves. So it gave a cushion to the country and it also coincided with the time when the demand for foreign exchange has really gone down.”
But to continue to benefit from this marginal stability, Joseph Nketsia advises businesses to avoid speculative buying which may trigger another round of depreciation.
“There is no need for them to buy dollars ahead as and when they have demand there is enough foreign currency on the market to meet their demand so they shouldn’t panic, they should stay put, go ahead with their proper planning and leave the foreign exchange to the market forces. I can assure them that they will not be overtaken by events. The cedi will continue its stability towards the end of the year.”