Cedis' free fall: Short-term measures impossible

An economist at the University of Cape Coast Business School Dr. John Gatsi says consumers should expect further increases in prices of goods and services as the cedi continues to depreciate against major trading currencies.

“There is no clear short-term measure for this issue. We only have medium to long term solutions that ought to be put in place”, the economist told Joy news.

He is predicting that rise in consumer price inflation is inevitable especially in July.

Dr. Joh Gatsi has also predicted the cedi’s free fall will only stop if remittances and investments increase.

Further depreciation of the currency is dragging businesses through another nightmare as prices of goods and services inch up.

With most businesses importing goods priced in dollars, businesses have no option than to sell in the equivalent of the cedi.

This unavoidably is pushing up the cost of goods and services.

Joy News' checks at some forex bureaux Wednesday morning reveals you will need almost 7 Ghana cedis to get a Pound and 4.35 cedis for a dollar.

A businessman who deals in spare parts in Accra echoed the concern of his colleagues on Joy News.

“For the past four, five days, you keep on changing prices every hour. You keep on adjusting your price upwards, upwards, upwards”, desperation seeped into his voice.

According to him, ‘panic buying’ of the dollar, appears to be the only immediate way to preserve their earnings and capital.

As a spare parts dealer, his clients have been postponing the purchase of spare part because they are becoming pricey.

If drivers, especially transport owners keep postponing the replacement of spare parts, it could lead to an increase in road accidents, he fears.

The price of lubricants has also gone up, he said. But he finds himself lucky that the purchase of lubricants has not been affected because most drivers need to change their engine oil regularly.

He is ‘hoping’ that government steps in as soon as possible.

Government has been chided over what some experts believe is poor management of the economy leading to the cedi’s depreciation.

Senior Economics lecturer at the University of Ghana, Dr. Osei Assibey wants all hindrances to exports from Ghana to be cleared because export is a measure to rescue the cedi from further depreciation.

He stressed that short of exports of local products, the cedi will remain weak against established currencies like the American Dollar, the British Pound and the Euro.

Some leading economists have chided government and Bank of Ghana for poorly managing the cedi as it depreciates further.

Dr. Assibey says that the cost of doing business, right from production stage is too high in Ghana.

For many dealing in exports, this prohibitive cost of business does not encourage exports which could help the country get more dollars, he explained.