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PRESENTATION ON THE CAUSES,EFFECTS AND SOLUTIONS OF DEPRECIATION OF THE CEDI.

ECONOMY OF GHANA. PRESENTATION ON THE CAUSES,EFFECTS AND SOLUTIONS OF DEPRECIATION OF THE CEDI. 1. PRESENTERS Keziah Naa O. Lamptey Mary Odoi Manteley Daniel Mensah Anum Raphael Ayambila Stephen Afutu Esi Mbrah Amponsah. 2. OBJECTIVES. What depreciation of the cedi is.

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PRESENTATION ON THE CAUSES,EFFECTS AND SOLUTIONS OF DEPRECIATION OF THE CEDI.

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  1. ECONOMY OF GHANA • PRESENTATION ON THE CAUSES,EFFECTS AND SOLUTIONS OF DEPRECIATION OF THE CEDI. 1

  2. PRESENTERSKeziah Naa O. LampteyMary Odoi ManteleyDaniel Mensah AnumRaphael AyambilaStephen AfutuEsi Mbrah Amponsah 2

  3. OBJECTIVES What depreciation of the cedi is. Causes of depreciation of the cedi. Effects of depreciation of the cedi. Measures to control the depreciation of the cedi. 3

  4. INTRODUCTION Inrecent times, the Ghana cedi has lost grounds against the major international currencies such as the United States Dollar, the British Pounds Sterling and the European Union Euro. 4

  5. What is depreciation of the cedi Depreciation of the cedi is the erosion of the purchasing power of the Ghana cedi relative to other currencies. It is basically the loss in the value of the cedi. Ghanaians have lost confidence in using the cedi as a means of exchange for goods and services. 5

  6. CAUSES OF DEPRECIATION OF THE CEDI Individuals and some businesses who keep foreign currency accounts in Ghanaian banks, account for the depreciation of the cedi. Inflation is also responsible for the depreciation of the cedi. Trade Imbalance is another cause of the depreciation of the cedi. Interest rates also account for the depreciation of the cedi. 6

  7. EFFECTS OF THE DEPRECIATION OF THE CEDI. • Effects on export operations: But now this same exporter, still exporting 10,000 tons of cocoa would receive $3,571. Ghc2.80=$1 10,000=10,000×1 =$3,571 2.80 Thereby incurring a loss of $6,429. • Effects on import operations: But now this same importer, still importing 7

  8. CONTINUATION OF EFFECTS OF DEPRECIATION OF THE CEDI. • the same quantity(20,000) would pay more for it because of the change in exchange rate. The importer will now exchange $56,000 for the same 20,000 quantities. Ghc2.80=$1 ?=20000×2.80 1 =$56,000 Therefore, the importer would incur an additional cost of Ghc 36,000 • Effects on consumer • Effects on government 8

  9. MEASURES OR SOLUTIONS TO DEPRECIATON OF THE CEDI • People should be allowed to keep foreign account currencies in banks, but rather withdrawals should be allowed only in cedis. • Interest rates should be re-adjusted. • Ghana must embark on massive export-drive programs . 9

  10. The state should use its taxation power to discourage importation.END OF PRESENTATIONTHANK YOU 10

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