The British pound sterling has humiliated the Ghanaian cedi with an all time low rate of £1 to 20.03 GH cedis.
This in effect has led to the Currency depreciation of the Ghanaian currency considering the drastic fall in the value
The Currency depreciation will significantly contribute to inflationary pressures by making imported goods to Ghana more expensive. This can lead to higher import costs, which will be passed on to Ghanaian consumers through increased prices.
The pound has also hit its highest level against the dollar in a year on Wednesday as investors bet on UK interest rates staying higher for longer.
Fresh data on Wednesday showed the rate of inflation was proving more stubborn than expected by some analysts.
This prompted traders to cut bets on an easing of rates in August, and sent the pound above $1.30 for the first time since last July.
The pound has also been boosted by market hopes that the new Labour government will offer economic stability.
Higher rates in the UK increase the pound’s value, because it can attract more overseas investment. This creates more demand for sterling, pushing up its value relative to other currencies.
Currency markets responded by betting that UK rates would remain higher for longer.
UK inflation was steady in June, with the headline rate at the Bank of England’s target rate of 2%.
But some of the underlying measures of inflation being watched closely by Bank rate-setters remain stubbornly high.
Inflation in the services sector, for example, remained at 5.7% in June, while core inflation, which strips out the effects of more volatile items like energy prices, held at 3.5%.
Some central banks, including Switzerland, Sweden and Canada have cut rates already, but the Bank of England and the US Federal Reserve are yet to make the same move.
The International Monetary Fund raised its outlook for economic growth in the UK on Tuesday to 0.7% this year, from 0.5% in its last set of global forecasts in April.
By Kofi Marfo( Sir Richie)
