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Research Article |

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

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.

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

APA Style

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

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

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

Copyright © 2023 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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