Dr. John Kwabena Kwakye, Director of Research, Institute of Economic Affairs (IEA), Ghana, has indicated clearly that the Ghana Cedi is not the third strongest currency in Africa, as the managers of the economy want Ghanaians to believe.
According to him, the Cedi can be best described as having a high value which is different from the strength of the currency.
In a series of tweets sighted by GhanaWeb, Dr. Kwakye noted that the Cedi was artificially valued highly when in 2007, under President John Agyekum Kufuor, the redenomination exercise paired the one cedi to one dollar.
He said since the redenomination if you compare how high the cedi has moved - from 10,000 to 100,000 cedis to the dollar - it explains how weak the Ghana currency is. Adding, the managers of the economy cannot create an artificial strength for the cedi unlike the value of the cedi.
"The cedi is not the third strongest in Africa. It is the currency with the third highest value. They are two different things. Just because a currency has a high value doesn't mean it is strong. The value can be artificially defined through redenomination.
"Let it be made clear that you can create an artificially high-value currency through redenomination. But you can't create an artificially strong currency. Your currency is as strong as your economy is," Dr. John K. Kwakye tweeted.
On the redenomination, he explained, "Let it be made clear that the GHC [Ghana Cedi] was given an artificial high value when it was redenominated in 2007. Since then, the exchange rate in old cedi terms has moved from 10,000 to 100,000 to the dollar. That tells you how weak the currency is."
"However, over time the test will be to what extent the currency maintains its value vs the $ [dollar]. Since 2007 when Ghana made its new cedi artificially equal to the $, in old cedi terms the exchange rate has moved from 10,000 to 100,000. How can you call the cedi a strong currency?" he questioned.
Dr. Kwakye's comment comes after Dr. John Kumah, a deputy Finance Minister, debunked claims that the Ghana cedi is the weakest currency in Africa.
He said, such a claim is mere propaganda meant to undermine the government’s fiscal measures in halting the free fall of the cedi against the dollar.
"I’ve heard all the propaganda, they said Ghana cedi is the worst in Africa and all kinds of things. Look, don’t believe that propaganda. I just returned from Tunisia on a programme, and Tunisia has the second strongest currency in Africa.
“Ghana is third actually according to any global ranking of currencies. I am talking about the strength of currencies in Africa. The Libyan Dinar, followed by Tunisian Dinar and the Ghana cedi is the third strongest currency in Africa. But maybe they were talking about the rate of depreciation.
“I just saw what is happening in Nigeria and they are equally complaining that their Naira is not just four hundred and something to the dollar, but sometimes it’s even 700 depending on where … sometimes they can’t even find the dollar. So this is a global situation,” John Kumah told Joy News in an interview.
Dr. John Kwakye, Director of Research at the Institute of Economic Affairs (IEA)