“In the event you don’t have something to do with that foreign exchange, liquidate it,” Charles Kusi Appiah, Head of the Enterprise and Financial Bureau of the Ghana Union of Merchants’ Associations (GUTA), has warned people and companies holding overseas alternate unnecessarily.
He gave the recommendation on Pleasure Information’ PM Categorical Enterprise Version on Thursday, Might 8, the place he pointed to latest market dynamics exhibiting the cedi gaining energy towards main currencies.
Based on him, clinging to {dollars} or different foreign exchange holdings when not required for rapid commerce or transactions isn’t just unwise—it’s economically damaging.
“Somebody referred to as me immediately asking, ‘What am I purported to do? I’m holding foreign exchange. Are we going to see a downtrend of foreign exchange?’ After all, sure,” he mentioned.
“The trajectory reveals that the cedi is day in and time out, gaining energy. So it doesn’t make financial sense so that you can maintain on to one thing you might be shedding daily.”
He defined that for years, the greenback was seen as a secure haven for native traders and merchants who had misplaced confidence within the cedi.
“Individuals put their belief in foreign exchange when the cedi, the native foreign money, shouldn’t be doing effectively and the foreign exchange turns into the shop of worth,” he mentioned.
“Everyone needs to reference their investments. And when you find yourself in an surroundings the place predictability turns into a problem, you at all times wish to see what you are able to do to guard your good points.”
However that, he famous, has modified.
“Now, foreign exchange demand has lowered with regards to worldwide commerce, and the cedi is appreciating. Why do you then maintain on to foreign exchange when you find yourself shedding worth?” he requested.
“With the introduction of the GoldBod, the place most worldwide transactions use gold, the demand for foreign exchange has lowered. Due to this fact, there’s no want for one to carry foreign exchange for any transaction,” he defined.
He confirmed that many GUTA members have already begun decreasing their extreme demand for {dollars}.
“Sure, the other has occurred. Now, the boldness is that the native foreign money is robust sufficient to be the shop of worth, so I don’t want to carry foreign exchange. That’s what accounts for the issues that we see now,” he mentioned.
Kusi Appiah believes this shift is one cause the cedi is stabilising.
“When the dynamics have modified and you’ll see that there’s no want to carry on to it, the foreign exchange demand reduces. And that’s accounting for the downward pattern of foreign exchange in our market.”
He urged merchants to discover options.
“There are different funding choices—in all probability the gold coin—that you would be able to put money into so that you simply don’t lose completely.”
In a ultimate warning to speculators, he mentioned: “When foreign exchange outperforms cedis, our working capital will get depleted. But when the cedi is now steady and powerful, then it’s time to rethink. Liquidate what you don’t want.”
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