International Journal of Economics, Finance and Management Sciences

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The Dynamics of the Ghanaian Currency Depreciation: A Case Analysis of the Performance of Ghana Cedi (GHC) Against Its Major Trading Currencies

Received: Oct. 05, 2023    Accepted: Jan. 16, 2024    Published: Feb. 05, 2024
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Abstract

Depreciation is a currency's exchange rate falling against other currencies. Economic fundamentals, interest rate differentials, political instability, or investor risk aversion can cause currency devaluation. Countries with weak economic fundamentals, such persistent current account deficits and excessive inflation, have declining currencies. Orderly and progressive currency depreciation increases export competitiveness and may reduce trade imbalance. Ghana imports and exports raw commodities. Ghana needs foreign currency but has a limited supply. The cedi depreciates against major currencies occasionally. In this study, the researchers assessed the performance of the Ghana cedi relative to major foreign currencies such as the U. S. Dollar, the British Pound, the Chinese Yuan, and the Japanese Yen. The following particular goals will be evaluated: This study's population will consist of all business owners in the central region of Accra. A simple random sample of fifty (50) individuals and firms that deal in foreign currencies was conducted. The study revealed a positive relationship between the US Dollar, British pound, Japanese yen, Chinese yuan, and Ghanaian cedi. The link between the US Dollar and the Great British Pound appears to be the strongest, with the Chinese Yuan being the weakest. This indicates that the Ghanaian cedi is unaffected by fluctuations in the US Dollar and British Pound. It was discovered that the Ghana cedi declined continuously versus other international currencies from 2016 to 2022. In 2022, the Ghana Cedi lost approximately 40.05 percent of its value against the US dollar, 21 percent against the British pound, 23.55 percent against the Japanese yen, and 34.98% against the Chinese yuan. The analysis advised that the Bank of Ghana enforce the prohibition on commodity pricing in other foreign currencies.

DOI 10.11648/ijefm.20241201.13
Published in International Journal of Economics, Finance and Management Sciences ( Volume 12, Issue 1, February 2024 )
Page(s) 18-43
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Redenomination, Ghana Cedi, Devaluation, Ghanaian Currency Depreciation, Major Trading Currencies, Foreign Exchange Rate, USD, GBP, CNY, JPY

References
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    Zubairu, I., Alenezi, M., Iddrisu, A. J., Dawson, S. (2024). The Dynamics of the Ghanaian Currency Depreciation: A Case Analysis of the Performance of Ghana Cedi (GHC) Against Its Major Trading Currencies. International Journal of Economics, Finance and Management Sciences, 12(1), 18-43. https://doi.org/10.11648/ijefm.20241201.13

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    ACS Style

    Zubairu, I.; Alenezi, M.; Iddrisu, A. J.; Dawson, S. The Dynamics of the Ghanaian Currency Depreciation: A Case Analysis of the Performance of Ghana Cedi (GHC) Against Its Major Trading Currencies. Int. J. Econ. Finance Manag. Sci. 2024, 12(1), 18-43. doi: 10.11648/ijefm.20241201.13

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    AMA Style

    Zubairu I, Alenezi M, Iddrisu AJ, Dawson S. The Dynamics of the Ghanaian Currency Depreciation: A Case Analysis of the Performance of Ghana Cedi (GHC) Against Its Major Trading Currencies. Int J Econ Finance Manag Sci. 2024;12(1):18-43. doi: 10.11648/ijefm.20241201.13

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  • @article{10.11648/ijefm.20241201.13,
      author = {Ibrahim Zubairu and Marim Alenezi and Ahmed Jamal Iddrisu and Samuel Dawson},
      title = {The Dynamics of the Ghanaian Currency Depreciation: A Case Analysis of the Performance of Ghana Cedi (GHC) Against Its Major Trading Currencies},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {12},
      number = {1},
      pages = {18-43},
      doi = {10.11648/ijefm.20241201.13},
      url = {https://doi.org/10.11648/ijefm.20241201.13},
      eprint = {https://download.sciencepg.com/pdf/10.11648.ijefm.20241201.13},
      abstract = {Depreciation is a currency's exchange rate falling against other currencies. Economic fundamentals, interest rate differentials, political instability, or investor risk aversion can cause currency devaluation. Countries with weak economic fundamentals, such persistent current account deficits and excessive inflation, have declining currencies. Orderly and progressive currency depreciation increases export competitiveness and may reduce trade imbalance. Ghana imports and exports raw commodities. Ghana needs foreign currency but has a limited supply. The cedi depreciates against major currencies occasionally. In this study, the researchers assessed the performance of the Ghana cedi relative to major foreign currencies such as the U. S. Dollar, the British Pound, the Chinese Yuan, and the Japanese Yen. The following particular goals will be evaluated: This study's population will consist of all business owners in the central region of Accra. A simple random sample of fifty (50) individuals and firms that deal in foreign currencies was conducted. The study revealed a positive relationship between the US Dollar, British pound, Japanese yen, Chinese yuan, and Ghanaian cedi. The link between the US Dollar and the Great British Pound appears to be the strongest, with the Chinese Yuan being the weakest. This indicates that the Ghanaian cedi is unaffected by fluctuations in the US Dollar and British Pound. It was discovered that the Ghana cedi declined continuously versus other international currencies from 2016 to 2022. In 2022, the Ghana Cedi lost approximately 40.05 percent of its value against the US dollar, 21 percent against the British pound, 23.55 percent against the Japanese yen, and 34.98% against the Chinese yuan. The analysis advised that the Bank of Ghana enforce the prohibition on commodity pricing in other foreign currencies.
    },
     year = {2024}
    }
    

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    AB  - Depreciation is a currency's exchange rate falling against other currencies. Economic fundamentals, interest rate differentials, political instability, or investor risk aversion can cause currency devaluation. Countries with weak economic fundamentals, such persistent current account deficits and excessive inflation, have declining currencies. Orderly and progressive currency depreciation increases export competitiveness and may reduce trade imbalance. Ghana imports and exports raw commodities. Ghana needs foreign currency but has a limited supply. The cedi depreciates against major currencies occasionally. In this study, the researchers assessed the performance of the Ghana cedi relative to major foreign currencies such as the U. S. Dollar, the British Pound, the Chinese Yuan, and the Japanese Yen. The following particular goals will be evaluated: This study's population will consist of all business owners in the central region of Accra. A simple random sample of fifty (50) individuals and firms that deal in foreign currencies was conducted. The study revealed a positive relationship between the US Dollar, British pound, Japanese yen, Chinese yuan, and Ghanaian cedi. The link between the US Dollar and the Great British Pound appears to be the strongest, with the Chinese Yuan being the weakest. This indicates that the Ghanaian cedi is unaffected by fluctuations in the US Dollar and British Pound. It was discovered that the Ghana cedi declined continuously versus other international currencies from 2016 to 2022. In 2022, the Ghana Cedi lost approximately 40.05 percent of its value against the US dollar, 21 percent against the British pound, 23.55 percent against the Japanese yen, and 34.98% against the Chinese yuan. The analysis advised that the Bank of Ghana enforce the prohibition on commodity pricing in other foreign currencies.
    
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Author Information
  • Accounting and Finance Department, Accra Technical University, Accra, Ghana

  • Accounting and Finance Department, Prince Mohammed Bin Fahd University, Dhahran, Saudi Arabia

  • Banking and Finance Department, University of Professional Studies, Accra, Ghana

  • Accounting and Finance Department, Accra Technical University, Accra, Ghana

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