Bank of Ghana reacts to claims from EIU that the cedi may witness serious depreciation in the coming years

The Governor of the Bank, Dr Ernest Addison has debunked claims from the Economists Intelligence Unit (EIU) that the Ghana cedi could witness another round of serious depreciation in the coming years.

Dr Ernest Addison, Bank of Ghana Governor

According to him, the projection is not plausible, especially if the unit is projecting the exchange rate in the next three years, because the horizon is too far.

“I don’t think that these projections are plausible, especially to be able to project the exchange rate for three years that is really a daring thing to do and you will find that such projections more often than not, do not turn out to be correct because the horizon is too far out,” he said.

He added, “But I can tell you that our objective is to keep the cedi as stable we can and also keep our inflation on target. We should expect that the cedi would remain stable over the short to medium term on the basis of that fact that we are currently fairly well positioned in terms of the level of international reserves we have.”

The Governor was speaking at the Monetary Policy Committee’s Meeting press conference held in Accra on Monday, May 27, 2019.

Recently, a report captured by the Economic Intelligence Unit (EIU) projected that the cedi will hit 6 cedis to a dollar by 2022.

The report further said the cedi may suffer some depreciation by end of this year. It expects the cedi to rise to an average of GH¢5.31 to $1 by the end of the year.

This according to the report will be due to the tighter monetary policy in the US in the latter part of this year into next year, and the renewal of political uncertainties associated with Ghana’s 2020 elections.

The editor of the EIU report, Nathan Hayes, stated that “The cedi will remain prone to periods of volatility, given the ongoing domestic economic weakness of high dependence on commodity prices.”

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