Unpredictable cedi appreciation could hurt businesses – Kenneth Thompson warns – Nsemkeka
Former Chief Executive of Dalex Finance, Kenneth Thompson, has raised concerns over the sudden appreciation of the Ghanaian cedi against the US dollar, warning that the lack of predictability could negatively impact businesses.
Speaking on JoyNews’ Newsfile, Thompson argued that the recent gains in the cedi’s value do not reflect a fundamental change in the economy, making it difficult for businesses to plan effectively.
Thompson expressed skepticism about the sustainability of the cedi’s recent strength, stating, “The fundamentals of this economy have not changed. If they had, you would see a gradual and consistent movement in the right direction.”
While acknowledging interventions such as gold-backed support for the currency, he questioned whether the Bank of Ghana (BoG) is operating within a defined exchange rate band.
“Is it between 12 and 13 cedis, or 12 and 15? I don’t know,” he said.
The financial expert highlighted the risks businesses face when exchange rate movements are erratic. “If I’m planning now, what figure do I use? If I get my numbers wrong, my business could collapse,” he cautioned.
The finance expert explained that without long-term stability, companies—especially importers and those with dollar-denominated obligations—could suffer severe financial strain.
“I don’t know what the rate will be in July or December. This unpredictability makes it hard to forecast costs and revenues,” he added.
Meanwhile, an economist at the University of Ghana Business School, Prof Godfred Bopkin, has urged an urgent need for Ghana to strengthen its foreign reserves in order to achieve long-term economic stability and predictability.
“What the market is looking for is stability, and we need to build our reserves. And I agree,” he said. “I heard the First Deputy Governor of the Bank of Ghana saying that they are not burning the reserves, and I agree with that.”