Consider a fixed exchange rate regime now to deal with current pressure on cedi – Dr. Ankrah

Economist and Investment Banker, Dr. Sam Ankrah is pushing for a fixed exchange regime to help deal with the current pressure on the Ghana cedi.

Dr. Ankrah who is also the President of the African Investment Group argues that this might be one of the sure ways to deal with the current difficulties facing the Ghana cedi .

Speaking on PM Express Business Edition, Dr. Ankrah noted that Bank of Ghana should also look at the support being directed to only critical sectors of the economy and restricting demand as well.

He noted that “we have been pumping USD into the system to make the FX rate stable.

“This is good for business but is artificial and unsustainable. When the FX support stops, as it has, you get the inflation we have. Why? Because in the real market, the availability of USD is low and the demand for it is high.”

“You can still use Cedi by the way. Just make Central Bank set the rate at 1:1,” he added

“Don’t simply rebase and then let the Cedi float freely (or nearly freely). Again, we are back to the balance of trade. We are in a trade deficit i.e net importer. So your local currency will continue to devalue.”

He further called for a clampdown on imports to grow Ghana’s local businesses.

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According to him, countries such as Norway had employed same tactics to check their country’s dependence on imports and a rapid depletion of their foreign exchange.

“We keep importing, we import even toothpick. Everything is imported and we dollarise our economy. So we might as well be honest about it and all the other alternatives. If we cut imports totally, other countries have done this years ago, the likes of Norway and co blocked every import and started locally manufacturing products. If that’s the way to go, that can help,” he said.

Source:www.myjoyonline.com