Addison: Rate Of Depreciation Of Cedis Has Been Lower This Year

Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, has disagreed with assertions that the depreciation rate of the cedis against the major trading currencies, especially the dollar, has been high this year.

Contrary to this claim that the rate is high, he said, it is relatively low this year compared to previous years.

Answering questions during the Monetary Policy Committee (MPC) press in Accra on Monday, Dr. Addison said, “I don’t think I agree with you that the depreciation has been higher this year.

“If you look at this year, it is much lower than last year. Last year by now we had 3 percent, so depreciation has been much lower this year. You might say that as the economy is beginning to recover, there will be more demand for foreign exchange, but I don’t think that it should be represented as in its entirety to the outlook for the Cedi.”

Cedi shows remarkable strength against major currencies, especially the US Dollar, the latest report released by the Bank of Ghana indicates.

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According to the latest Monetary Policy Report by the Bank of Ghana, the Cedi has shown a cumulative year-to-date depreciation of 1.7 percent for 2021.

With this impressive depreciation rate, the Central Bank and analysts project that the Cedi is likely to end the year 2021 with the lowest rate of depreciation since 1992 and in the Fourth Republic.

The Cedi has shown stability in the past few years, bouncing back from its highest annual depreciation rate of 31 percent in 2014.
While the Cedi depreciated at 12.9 percent in 2019, it came down to 3.9 percent in 2020, and with three months to end 2021, the 1.7 percent is the lowest depreciation in nearly three decades.

The Monetary Policy Report from the Bank of Ghana also indicated improved performances in some critical sectors of the economy while other sectors are still yet to recover from the dampening effects of the Covid-19.

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The report showed a more robust pick-up in annual GDP growth to 3.9 percent in the second quarter of 2021, from the 3.1 percent recorded in the first quarter and a 5.7 percent contraction in the same period of 2020.

The report also indicated a positive outlook in the banking sector, which remains stronger and well-capitalized, with more substantial growth in total assets, investments, and deposits.

Total assets increased by 16.7 percent as at end-August. Profitability levels of the banks remain high, with profit growth driven by increased income growth.

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Source: 3News.com

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