Steve Hanke: U.S. Economist Describes Ghana Cedi As Bank of Ghana Junk Currency

Steve Hanke: U.S. Economist Describes Ghana Cedi As Bank of Ghana Junk Currency

  • More concerns are pouring in for the cedi's constant fall against the US dollar in recent times
  • Respected US Economist Prof Steve Hanke has said the problems of Ghana's local currency looks grim unless a currency board is instituted
  • Prof Hanke also said inflation figures in Ghana was worse, estimating that it was about two times the official figure of approximately 30%

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US-based Economist Professor Steve Hanke has given a grim assessment of Ghana's local currency, describing the cedi as a central bank "junk currency" as depreciation persists.

Prof Steve Hanke (L) and Nana Akufo-Addo.
Prof Steve Hanke (L) and Nana Akufo-Addo. Source: UGC
Source: Getty Images

The popular economist said his calculations show that the the cedi has depreciated by approximately 34% against the US dollar since January 2020.

"In #Ghana, the economy is in the tank. By my calculations, the #cedi has depreciated by ~34% against the USD since Jan. 1, 2020. The cedi is a central bank junk currency. GHA must mothball its central bank and install a currency board," he tweeted over the weekend.

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On inflation, he also Ghana was not doing well. According to his calculations show that Ghana was in 10th place on his week's inflation table.

"On August 4, I measured Ghana's #inflation at a stunning 58%/yr-almost 2x the official inflation rate of 30%/yr. Ghana must mothball its central bank and install a #CurrencyBoard," he tweeted on Monday, August 8, 2022.

To save the cedi from further depreciation the respected US Economist stressed in yet another tweet on Monday that:

"Ghana must mothball its central bank and install a #CurrencyBoard."

A currency boards are typically instituted as a vehicle for an extreme form of pegged exchange rate. When such a board is instituted, exchange rate and the money supply decisions are taken away from the country's central bank.

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Cedi Depreciation: Traders To Hit The Streets

Meanwhile, YEN.com.gh has reported in a related story that traders in Ghana are clamouring for mammoth street protest over the cedi's depreciation.

Thousands of traders have raised concerns about the continuous fall of the Ghana cedi against the dollar and other major trading currencies.

The leadership of the umbrella body of a huge number of traders, the Ghana Union of Traders Association (GUTA) has said members are agitating over the cedi's problems.

The cedi has been falling against major trading currencies, chiefly the US dollar, Pounds Sterling and Euro, since the start of 2022.

Available data show that $1 was going for GH¢8.55 as at Monday August 8, 2022, a further depreciation of 0.59% of its value.

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Source: YEN.com.gh

Authors:
George Nyavor avatar

George Nyavor (Head of Politics and Current Affairs Desk) George Nyavor writes for YEN.com.gh. He has been Head of the Politics and Current Affairs Desk since 2022. George has over 9 years of experience in managing media and communications (Myjoyonline and GhanaWeb). George is a member of the Catholic Association of Media Practitioners Ghana (CAMP-G). He obtained a BA in Communications Studies from the Ghana Institute of Journalism in 2010. Reach out to him via george.nyavor@yen.com.gh.

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