What Dr. Bawumia said about Ghana's exchange rate in 2012

Economist, Dr Mahamudu Bawumia, in 2012 gave a damning verdict on Ghana’s exchange rate position and depreciation of the local currency against major trading currencies.

At the time, the local currency was trading at GH¢4.78 to the US dollar ending December 2021.

That year, the cedi began January selling at GH¢5.32 to the dollar but gradually

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Although the Evans Atta Mills administration was touted as one of the best to maintain a stable exchange rate regime ever witnessed in Ghana, Dr Bawumia during a public lecture lambasted the National Democratic Congress for its poor economic performance.

In a video sighted by GhanaWeb, the then 2012 Vice Presidential candidate [Dr Bawumia] of the NPP speaking on the state of the economy blamed the NDC for the free fall of the cedi where his famous ‘if the fundamentals are weak, the exchange rate will expose you’ comment was first birthed.

“The lessons from history for government is that you cannot manage the economy with propaganda…Infact, you can you engage in all the propaganda want but if the fundamentals are weak, the exchange rate will expose you,” Dr Bawumia said while the crowd jeered.

“The type of free fall that we are seeing with the cedi exchange rate is a vote of no confidence by market players in the management of the economy,” he added.

He asserted that many market players at the time were pricing goods with the expectation that the exchange rate was going heading toward a ratio of 2:1.

“The scary part of this is that we are only just into the first quarter of the year [2012], with three more quarters to go while the situation could therefore get worse. This development is therefore not a fair one to the private sector and Ghanaians,” Dr Bawumia said.

Meanwhile, in recent developments, the Ghana cedi has maintained its spot as the worst performing currency in Africa, according to a Bloomberg report.

The portal said the cedi recorded a -28.82 percent depreciation to the dollar as of August 8, 2022, to sell at nearly GH¢9 to a dollar.

This means the currency could be heading for a record-worst performance in the last 25 years. The low performance of the cedi has however driven inflation to a record of 31.7 percent in July.

Watch the video below:



MA/ESA