Barely one month into the New Year, and traders as well as importers are beginning to feel the heat of the appreciation of the dollar.
The situation appears to be so intense that it is not only prices of non-food items that have increased but prices of some food items as well.
Since the beginning of the year, the cedi has been depreciating rapidly against the dollar, going down by about 4.68 percent as at yesterday, a condition that is making life uneasy for importers since they have no choice but to increase prices of imported products.
Ghana's currency is currently pegged to the US dollar and therefore all transactions are done in dollar-terms.
A visit by CITY & BUSINESS GUIDE to the Central Business District of Accra and Kaneshie revealed surging price of items because of the rising dollar. Items such as electrical appliances, textile materials and shoes had shot up.
Kofi Boateng, an electrical appliance dealer told this paper that, the price of items he sells would continue to go up since he uses the US dollar to buy them.
“When the dollar goes up, price of items also inches up because we pay higher import duty. In addition, extra money is needed to buy the products when the cedi declines,” he commented.
Grace Mensah, a merchant in men and ladies wear including shoes also expressed similar sentiments, adding that traders cannot keep prices at the same level whilst the dollar which they use to buy items keep rising.
She therefore appealed to the government to implement policies that will bring some stability to the local currency.
The surging price of these non-food items could also have some rippling effect on inflation which jumped to 18.13 percent in December 2008 after it had maintained some stability for about five months.
Felix Darko, a spare parts dealer who seems to understand the effect of pricing on the economy called on the government to institute pragmatic policies that would prevent price surges.
He told this paper that failure on the part of government to check this would force the Central Bank to increase its benchmark indicator, which is the prime rate- meaning interest charges on bank lending rates would go up.
Already, some financial and economic analysts have called for a well-meaning budget that would put some vibrancy into the economy which is not in the best of shapes for now.
Though the cedi recovered marginally against the major foreign currencies last Friday, it returned to its old state of bad performance yesterday.
It declined by GHp0.27 against the dollar and also went down GHp1.22 against the pound sterling-one of the worst since the beginning of the year. It however appreciated by GHp1.75 against the euro and 0.04 against the euro.
The year-to-date depreciation was 4.68 percent to the dollar and 2.78 percent to the Pound. But the year-to-date appreciation stands at 4.16 percent to the Euro and 4.34 percent to the CFA, according to the Gold Coast Securities (GCS)-Cedi Index
By Charles Nixon Yeboah