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Unions blame Ghana's free-falling currency on telcos

Ghana , 26 Apr 2012

Unions blame Ghana's free-falling currency on telcos

Ghana's Trades Union Congress (TUC) has blamed telecom operators in the country for constant pressure on that country's local currency, the cedi (GHC).

Secretary general of the Ghana Trades Union Congress, Kofi Asamoah, accused the country's mobile network operators of failing to bring in much needed foreign currency into the country.

Ghana's five mobile telecom operators comprise Vodafone, MTN, Tigo, Airtel and Expresso.

Assmaoh said the telcos hardly brought in any foreign currency beyond their initial capital investments..

There were no immediate response from the five mobile network companies.

Asamaoh said at the time of the redenomination of the Cedi in July 2007, US $1.00 could buy GHC 0.92 to. And by 2008, the new cedi was trading at par with the dollar.

Currently, the Ghana cedi is trading at GHC1.77 to $1.00.

According to Asamoah, for this year, the depreciation of the Ghana Cedis has been phenomenal.

“In the first quarter of the year, the national currency has depreciated by 8.3% against the US dollar compared with 2% depreciation in the same period in 20011”.

In January 2012 alone, the cedi recorded 5.9% depreciation against the US dollar.

But, the Bank of Ghana (BoG) and government explained that the decline experienced in January was transitory since it reflected a higher demand for foreign currency by businesses to make payment for goods and services procured in December for Christmas.

A financial analyst, John Gatsi noted that though the depreciation was a recurring cycle, speculation has been the major factor in its weakening.

“The depreciation of the economy is one thing every economy goes through but when it is fuelled by speculation in the market it becomes very difficult to handle”.

He said “Some may feel that once the cedi starts to lose its value, it is better to change it into foreign currency.”

Gatsi added that the election year also tended to distort the economic indicators which could be detrimental to the cedi.

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