Ghana advised to install a currency board as Cedi to Dollar depreciation hits 49.31% – Prof. Steve Hanke

Professor of Applied Economics at Johns Hopkins University, Prof. Steve Hanke has called on the government of Ghana to immediately institute a currency board to manage and curtail the free-falling cedi.

In his latest blog post on the Ghanaian economy, Prof. Steve Hanke indicated that the Ghanaian cedi has depreciated against the USD by 49.31% since Jan 2022, which is why Ghana takes the 6th place in this week Hanke’s #CurrencyWatchlist.

On top of the watchlist is Zimbabwe, Venezuela, Lebanon, Cuba, Syria then Ghana. Thus, Ghana’s Cedi is currently the worst currency in Africa, according to Prof. Hanke’s watch list.

The Ghana cedi shows some strength from 10th December 2022 to 16th December then fell into the depreciation trend by 20th December, and it has not been able to recover ever since. Prior to that, the cedi lost value and was declared the world’s worthless paper. Currently, the Dollar to Cedi rate in Forex bureaus and banks is hovering between GHS12.0 and GHS13.00.

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Ghana’s decision to institute a Domestic Debt Exchange programme has been completed with many pensioners asking the go government to exempt them from the DDE Programme, but the government has refused to heed the call. Fitch Ratings has downgraded Ghana’s Long-Term (LT) Local Currency (LC) Issuer Default Rating (IDR) to Restricted Default (RD) from ‘C’. The issue ratings on local-currency bonds issued domestically have also been downgraded to Default (D) from ‘C’. Fitch has affirmed Ghana’s Long-Term Foreign Currency (FC) IDR at ‘C’. Fitch typically does not assign Rating Outlooks to sovereigns with a rating of ‘CCC+’ or below.