Cedi depreciation: Manage the economy well if you want people to stop hoarding dollars at home – Prof. Gatsi to gov’t

Headlines Prof. John Gatsi
Prof. John Gatsi

The Dean of the Business School of the University of Cape Coast, Professor John Gatsi has indicated one of the reasons why people hoard foreign currencies is because the economy is not being managed well.

Speaking to TV3 in a discussion on the depreciation of the cedi against foreign currencies, he said the argument that the local currency is suffering due to speculations is not accurate.

Prof. John Gatsi proposed that if government led by the Ministry of Finance wants people to stop speculating and hoarding foreign currencies, they should simply manage the economy well.

“You recall that recently when the Finance Minister held a press conference, he indicated that when the IMF money comes in we will be okay, but the traders are aware that you have received a number of money from the IMF money already but it couldn’t change anything and therefore they will prepare themselves using this information available to decide whether they want to be active on the market or not, and that will determine whether depreciation will be enhanced or not. I think we are over-flogging the issue of speculation and we are using speculations as though they are nation raiders but I do not think so.

“When the economy is managed in such a way that it does not deliver confidence to these traders then speculation is heightened. If you manage the economy well, the outcome is so positive nobody will be doing speculations, and individuals who do not need foreign currencies for the whole year will not be buying foreign currencies and be storing, they hiking demand pressures,” Prof. John Gatsi said.

Finance Minister Dr. Mohammed Amin Adam at his last monthly press conference said the recent pressures observed on the cedi is largely on the back of the strengthening of the US Dollar against major trading currencies, seasonal forex demand including elevated demand from corporate institutions, payment to contractors and to IPPs, high Cedi liquidity, and speculation.

He assured that the Ministry is closely working with the Bank of Ghana to stabilise the cedi.

Eric Nana Yaw Kwafo
Eric Nana Yaw Kwafo

JournalistPage: EricNanaYawKwafo