Cedi's Depreciation Rate; In Depth Analysis Of Ghana's Cedi Fall Over Successive Change Of Government

 

The Ghana cedi, currently, stands at six Ghana cedis, eighty eight pesewas to a dollar. This development has caused a great stir in the public space as the various political parties take swipes at each other as to who is culpable in this outrageous fall of the cedi. Mere value increments may be deceptive in analysing the periodic increase in the dollar rate. So we will analyse the percentage increments in the dollar rate from one government to the other.

As at 2008, after the redenomination of the cedi, the cedi stood at sixty four pesewas (GHS 0. 64) to a dollar. This quickly increased to 90 pesewas in 2009 when the Kufour administration left power (a 41% increase).

Again, the dollar rate surged upwards from 2009 to 2013 through several fluctuating values. The NDC government at this time, was able to stabilize the dollar between 2010 and 2011 and further decreased the dollar rate from GHS1. 60 to GHS1. 35 in 2013. All in all, the NDC government, in its first term increased the dollar from GHS0. 9 to GHS1. 35 (a 50% increase)

From their first term, the dollar increased against the cedi year after in 2014(from 1. 25 to 2. 10), 2015(2. 10 to 2. 90), 2016(2. 90 to 3. 82) up until a reduction in the dollar rate between 2016 and 2017. Coincidentally, the dollar's reduction was recorded in an election year when the dollar dropped by 6% against the cedi. The NDC's second term saw the cedi depreciate by 166% from GHS1. 35 in 2013 to GHS3. 59 in 2017. The highest that was recorded in the entire period under review.

On the other hand, the NPP's performance on the management of the dollar has been poorer, compared to that of the NDC's. The NPP in their first term recorded a 55% increment in the dollar rate with the cedi moving from GHS3. 59 in 2017 to GHS5. 58 in 2021 (representing a 55% increase in the inherited rate) as against the 50% of the NDC in their first term.

The second term of the NPP is only a year old and already, the dollar has appreciated stunningly against the cedi; moving from 5. 58 to 6. 88 in March 2022. This represents a 23% increment in the inherited dollar rate after only a year in office.

The cedi's performance against the dollar doesn't look like changing anytime soon. If trend is anything to go by, then at the current state of the economy and extrapolating from the NDC's performance in their second term, should the dollar increase by a hundred percent before end of NPP's second term, then the exchange rate should be expected at Ghs11. 16 by the end of 2024.

This exposition is worrying for all citizens, the only hope is that certain mitigating factors emerge in the country's quest to help the cedi appreciate