Group Chairman of UT group of Companies, Prince Kofi Amoabeng, has waded into the debate as to whether or not the Cedi should be devalued. According to him, devaluing the Cedi is unnecessary as the currency continues to depreciate considering its floating nature. The Cedi depreciated by 15.7% in 2015.
The Governor of the Bank of Ghana earlier said the Cedi does not need to be devalued but some industry watchers have argued that the Cedi must be allowed to devalue to its natural value in a bid move the Ghanaian economy from an import led to an export led economy. But in an interview with Citi Business News, Prince Kofi Amoabeng said the Cedi has already subjected itself to devaluation which is determined by market forces.
He stated three reasons why the Cedi should not be devalued:
“The currency is floated; we have a floating foreign exchange currency regime. So depending on supply and demand, we will move in a one way or the other which means our currency subjected itself to devaluation.”
Secondly, Judging from the Cedi’s performance in the past eight years it has lost 75% of its value, seeing as the current rate is 4 Cedis to 1 dollar. It used to be GH¢1 to $1. Clearly it doesn’t need anymore devaluation; that would be too much.
The third reason: we are an import based economy and we don’t export much. Devaluing the Cedi further means imports are going to get more expensive devaluing doesn’t automatically mean an increase in export because it is not elastic enough to respond to the rate of devaluation. There is no need to devalue.”
citifmonline.com