Professor Godfred Bokpin, an economist, has urged the government to take the necessary steps to restore investor confidence in the economy.
He claims that investors have begun investing their money in the dollar as a result of the ailing economy and the rapid depreciation of the cedi, further weakening the currency.
He noted that these investors continue to act rationally even though they are aware of the effects their actions will have on the local currency.
“Investors are rational actors,” he stated.Love for one’s country remains constant when it comes to making money.We see GUTA people closing their shops and all of that—nobody loves Ghana; people love their bottom line.
According to Prof. Bokpin’s explanation, the majority of investors have focused on the dollar because the cedi has become a less desirable store of value.
He claims that this is because the dollar has strengthened and is “having a future.”
He explained, “So when people exit and there are no alternatives because of the time value of money, they wouldn’t want to keep the money idle.” As a result, they will search for a currency that is more stable, and the dollar is currently the currency that is more stable.
He went on to say, “If you look at it from the perspective of the world, you’ll see that the dollar has a future not just in Ghana here because the dollar is consistently strengthening across even major trading currencies.”Therefore, if you are an investor with money, you should consider denominating it in a currency that is stable and more likely to strengthen.”
The Economist has stated that the country will face worse times if economic managers fail to implement measures that will re-anchor investors’ support and confidence in the cedi.
“The country and the powers that are vested in those who are managing the country must love themselves sufficiently to put in place the appropriate measures so that the love of individuals is anchored around that particular angle.Aside from that, people will behave badly.
The trade-off in this situation is the cedi; whenever you buy a dollar, you automatically sell cedis.Additionally, they are selling cedis as an increasing number of people demand dollars.The value will have to decrease as the supply of cedis increases.According to him, “If you look at it from that perspective, you know that you probably can say that the worst has yet to happen.”