The Minority in Parliament has predicted that the cedi to US dollar exchange rate on the inter-stock bank market is expected to reach about GH¢6 per dollar by the end of the third quarter in 2019.
The Minority indicated that it has been reported on various media platforms, both locally and internationally, that the cedi/US dollar exchange rate is expected to hit GH¢6 per dollar.
In a media encounter on the state of the economy at the Justice D.F. Annan Auditorium in Parliament, the Minority pointed out that HSBC global research on March 15, 2019, projected that the Cedi/US dollar exchange rate will reach GH¢5.9 per dollar and GH¢6.2 per dollar by the second and third quarters respectively, and will end the year at GH¢6.3 per dollar.
The Minority Spokesperson on Finance and the Ranking Member of the Parliamentary Standing Committee on Finance, Hon. Cassiel Ato Forson, stated that the cedi/dollar exchange rate as at March 2019, stood at GH¢5.65 per dollar and GH¢5.60 per dollar at the Fidelity Bank Ghana Limited and the Ghana Commercial Bank respectively.
The Ranking Member who doubles as the Member of Parliament for Ajumako/Enyan/Essiam, averred that the current exchange rate at the interbank market makes the Ghana Cedi, the weakest currency in Africa.
Hon. Ato Forson added that the poor performance of the Ghana Cedi comes on the back of huge oil revenue inflows in the country.
He explained that Ghana has become a net oil exporter following the coming of some two additional oil fields worked on by the previous government administration.
He however stated that in the last two years, the current government has received the equivalent of GH¢6,825,548,529.61 ($1,474,958,169.38) in foreign exchange but has still not been able to augment its net international reserves beyond end-2016 levels.
He told the media that in addition to the receipts from oil revenue, the current government has also benefited from forex inflows from the Franklyn Templeton Bond, and a series of Eurobond issuances over the same period.
“The Ghanaian economy is currently becoming more vulnerable and externally unstable due to declining net international reserves and the fast rate of depreciation of the Ghana cedi”, he lamented.
Causes of the Cedi Depreciation
On the causes of the cedi the depreciation, Hon. Ato Forson explained that the depreciation of the cedi can be attributed primarily to portfolio outflows as foreign investors repatriated coupons and principals, and a large current account deficit.
The Former Deputy Minister under the previous government administration added that large trade service charges and interest payments is one of the contributory factors to the fall of the cedi.
Hon. Ato Forson disclosed that the current account at end-December 2018 posted a deficit of 3.2 percent of Gross Domestic Product (GDP).
In his conclusion on the cedi depreciation, he reiterated that within the context of a weak current account balance and increasing portfolio outflows, the Bank of Ghana’s large foreign exchange market intervention, that lowered its gross international reserves significantly, could not arrest the depreciation of the cedi, which reached 9 percent by end-year.