Ghanaians must embrace themselves for the possible high cost of living induced by the local currency depreciation as banking and finance analyst, Dr. Richmond Atuahene has observed that the current free fall of the cedi is expected to worsen towards the end of the year.
The local currency after experiencing relative stability at the beginning of August fell back against in recent days. The cedi has currently crossed the GH¢16 mark against the US dollar.
Currently, some foreign exchange bureaux are selling the dollar at GH¢16.20 to GH¢16.30, while on the interbank market, the dollar began trading on Monday at GH¢15.72 to GH¢15.80, compared to GH¢15.60 to GH¢15.70 levels just a week ago.
Speaking in an interview monitored by The High Street Journal, the financial consultant announced that if nothing drastic happens the cedi will further depreciate to GH¢21 to the dollar and GH¢30 to the pound by December this year.
“If we don’t take care by the time we get to December, the pound will be about GHC30 and the Dollar will be about GHC21,” Dr. Atuahene predicted.
Justifying his prediction and the cause of depreciation, the financial analyst disclosed that there are no inflows of foreign currency in the economy while there is a huge demand for forex by businesses for importation.
“The simple answer is that the foreign inflows are not there. We are not selling outside and we are not exporting. Basically, the cedi is now having a run because there is no supply but there is demand. And when there is demand and there is no supply, that comes with the depreciation of the cedi,” he explained.
He further debunked the assertion held by some Ghanaians that the IMF support as a result of the External Credit Facility (ECF) would help to strengthen the cedi. He reveals that “all the monies that have been paid are being put in an escrow to meet the external debt that has to be paid off.”
With the IMF funds being kept in escrow, Dr. Atuahene noted that the Bank of Ghana cannot intervene in the market hence the recent depreciation.
“The Bank of Ghana is not intervening and that is why the cedi is finding its own level. So the cedi is not going to get better until maybe I don’t what will happen because the supply is not there. It is going to go on and on. We are in the import season. Everybody is importing at the moment. The demand is there,” he noted.
Dr. Atuahene further revealed that the recent announcement by the government to import food following the drought situation will further worsen the plight of the local currency.
Given this prediction by the financial analyst, Ghanaians should possibly expect an import-driven inflation which will increase the cost of living, erode incomes, and make life difficult for low-income earners and the vulnerable.
