The Cedi and Naira are two of Africa’s and the world’s most mishandled currencies, according to John Kwakye.

Dr. John Kwakye, Director of Research at the Institute of Economic Affairs (IEA), has raised concern about Ghana’s Cedis and Nigeria’s Naira’s problems versus major trading currencies, particularly the Dollar.

In his opinion, the two currencies are the most mishandled in Africa and the globe at large.

“The cedi and naira are two of the most mismanaged currencies in Africa and the world,” he stated on his X platform. Dr. Kwakye, an economist, has criticized Ghanaian authorities for failing to maintain a strong, stable currency after 67 years of political independence.

“Our economic strategists regard a currency that has lost 22% of its value this year as steady. Seriously?” He said.

The naira failed to sustain the N1,600 benchmark in the official FX market over the last week, despite the dollar index reaching its lowest position since January, according to Nairametrics.

According to the Bank of Ghana, pressure on the cedi lessened slightly in June after peaking in May.
The central bank’s amended limits on advanced payments for imports, as well as the continued implementation of the new Cash Reserve Ratio (CRR) regime, contributed to the easing of pressure, according to the central bank.

The central bank’s amended limits on advanced payments for imports, as well as the continued implementation of the new Cash Reserve Ratio (CRR) regime, contributed to the easing of pressure, according to the central bank.

It also stated that good feelings from the third tranche of the IMF ECF, progress in external debt restructuring, and the Fed’s predicted rate decrease all aided the cedi’s recovery.

On a year-to-date basis, the native currency fell by 18.6%, 17.9%, and 16.0% against the dollar, pound, and euro, respectively. This compares to a 22.0 percent, 26.3 percent, and 23.8 percent devaluation against the dollar, pound, and euro, respectively, over the same period in 2023.

In the future, Ghana’s tight monetary policy stance and forward guidance on policy rate decreases in some advanced nations are projected to work through the expectations channel to help relieve pressure on the cedi. Additionally, strong liquidity management and ongoing FX auctions are expected to sustain the FX market. However, fiscal spending ahead of future elections continues to pose an upside risk to the cedi’s stability.

“On a year-to-date basis, the cedi fell by 19.9 percent in nominal trade-weighted terms and 22.5 percent in FX transaction-weighted terms against the currencies of the main trading partners. This compares to a depreciation of 30.7 percent and 28.6 percent in nominal trade-weighted terms and nominal foreign exchange transaction-weighted terms, respectively, over the same period in 2023.

“On a year-to-date basis, the cedi has declined by 11.4 percent, 9.5 percent, and 7.7 percent versus the dollar, pound sterling, and euro, respectively. For the same period in 2023, the cedi’s real exchange rate fell by 16.36%, 23.03%, and 18.16% versus the dollar, pound sterling, and euro, respectively.

“On a year-to-date basis, the cedi fell by 8.4 percent in real trade weighted terms and 11.1 percent in real forex transaction weighted terms.” This compares to depreciations of 18.3 percent and 16.6 percent in real trade weighted terms and real FX transaction weighted terms, respectively, for the same period in 2023,” the BoG stated in its July 2024 Monetary Policy Report.