₦airaland Forum

rvp2018:
How can a currency that is annually on a free-fall be called stable and predictable. Don't believe your own propaganda. You have negative feedback loop that is killing the CEDIS.

It is predictable and stable because it is controled the market forces
so everyone can forecast and know when it will appreciate and when it will depreciate.

They only reason why trade surplus hasnt kicked in to the benefit of the Cedis is because
a lot of other legacy issues have to be resolved first

vaxx2:
That is exactly what they are doing ?

then they are one step away from zimbabwe

because debt substitution simply means your debt is not going down anytime soon

And whiles there is not much expansion going on in your economy,
growth slows down.

rvp2018:
1) It's not structural because you have positive Trade balance. You export more than your import. You have trade surplus. You also have 8B dollars from remittances. So on face value - you're doing well - but CEDIS isn't.

2) I think the problem is more confidence thing - you demonetization failed because Ghanian have really bad memories of Cedis during hyper-inflation - so nobody trust Ghanian Cedis.

3) Kenya has been free-floating kshs since 93, we have no forex controls and CBK don't borrow any money. They buy and sell forexs like any market player.

4) The strength of Kshs is not a mystery - it's because Kenya esp Nairobi attract a lot of forex - because we are financial capital - we have many NGOS, UN and MNCS bring lots of forex - we have tourist bring forex - we have lot of capital flight from region (Tanzania, Somali, etc ) ending in Nairobi. Heck we have people as far as UK, US, Nigeria coming to buy kenya real estates.

5) We are now mostly debt re-financing. We borrow 6B dollars - about 3B dollars externally - and 3B dollar internally. And we repay 6B dollars - about 3B dollars internally and 3b dollars externally. So forex from debt is NOT NOT responsible for strength of Kshs - we pay back as much dollars as we borrow.

1) it is structural, a few years of running a trade surplus cannot change a 50 years only problem.
Give it 10 more years of running a surplus and everything balances off.

2) demonetization worked perfectly well such that there are more electronically held money than in circulation

3) Kenya kshs has never floated freely since kenya became an independent nation.

4) it is not a mystery at all
Because everyone knows that you economic figures are massaged
a capped inflation, borrowing to peg the currency and entering into a debt circle.

5) do you know what happens before an economy has to turn to borrowing to reservice debt ?
this happens, the country's revenue can no longer service it debt because it is highly stretched
the country is not exporting much for the central bank to have enough flexibility.

This signals sends investors away such that only aid agencies want to stay and wait for the next crisis.

rvp2018:
Facts are stubborn. Nearly 1/3 of money in Ghana is banked in dollars. It doesn't by who - but foreign-currency denominated account are huge. I wish you an inject some confidence to CEDIS - otherwise it's on a serious free-fall - and before soon you'll be in yet another DEMONETIZATION

This time peg your CEDIS in Kshs - and let Central Bank of Kenya help manage your CEDIS.

not true
Foreign currency-denominated accounts are peanuts of the total accounts held with central banks
Their contribution in value to deposits held is 1/100th because there are very few people who earn in dollars.

Investor confidence is super high

there is real confidence in the Cedis and that is why Ghana's Eurobonds are highly oversubscribed.
This confidence is leading to more investment inflows.

rvp2018:
Central Bank of kenya do not have any borrowed money. Treasury is the one that borrows and use the money. Central bank of kenya buys and sells forex like any market player - and they come to market to buy or sell - so they can keep Kshs stable.Commercial banks are also key forex players. When fundamentals are against Kshs - no amount of CBK defending Kshs can help - so for instance Kshs once depreciated to 107shs to a dollar.

You need to learn how central banks work to create money.

Every MOU they sign is a debt.

rvp2018:
Kshs has been free floating for as long as I can remember (I think 1993). IMF last year disagreed and classified it managed because they cannot figure out just how strong and defiant Kshs has been. CBK intervene as market player. We don't have Nigeria kind of 3 exchange rates. We don't have black market for dollars. You can buy and sell as many dollars as you want anytime. And you can take them out of Kenya anyday. But nobody does that because our fundamentals are so strong.

if those fundamentals are so strong, why do you keep borrowing to support the pegged currency.


if your currency was freely floating,
a 15 billion import to 5 billion export will lead to massive depreciation and hyperinflation.

This is one of the reasons why no one wants to come to Kenya and open any serious business for production.

rvp2018:
You know the stats you buddy are quoting are very shocking. Inflation of 15% down to 7.5% for example is only possible in a country that is in economic mess. Not a country that is growing at such rate. Kenya inflation rate has always been under 5%. For all the time I can recall Kenya inflation has always been single digit. Nowadays it as low as 4%.

The accusation that Kshs is artificially pegged to dollar has no basis - Kshs for last 30yrs has been 63- 78 -85 -100 to the dollar. We cannot possibly sustain to keep Kshs for that long without the fundamentals. In our 50yrs of independence - we have only had one serious hyper-inflation last 2-3yrs - we had Kshs drop from 20shs to 60shs in 1992/1993 - after our central bank was looted/donor funding withdrawn - in the run up to the first real multiparty election.

no one is disputing the fact that Ghana has gone through an economic crisis and is back.

The accusation that your currency is artificially pegged to the dollar whiles your inflation is capped are factual

Those depreciation patterns correspond with your debt increment patterns as you struggle to keep it under control before all the cards come tumbling down.

vaxx2:
How can they then think about social development like connecting the numbers of citizens in rural area to national grid, like water access , like building schools, hospitals or even financing bigger project in excess of 2 billion dollar without being hit hard ...

They can't for now because it will only lead to more debt

especially when only a small part of their budget is left for financing capital expenditure

rvp2018:
Capping was populist move by parliament to reign on the banks who had refused to be self-regualte - although it was not as bad as I have seen in Ghana and Nigeria. We are a modern democracy - and Judiciary said no - that is Central Bank job. As you speak interest capping is gone. It was only there for 3yrs (2016-2019).

When it come to purchasing power - I don't what exactly that mean - you see we have huge trade deficit - meaning we import more than we export - so a strong Shilling works for us - purchasing power wise - and of course it also helps when we have to repay debts.

Now Ghana you have positive trade deficit - so I don't even know why your president think you're importing more than you should - and but what is hammering you is not a WEAK CEDIS - it's a UNSTABLE RAPIDLY DETERIORATING CEDIS. Nobody can trust such a currency - leading to capital flight.

Everyone trust such a currency because they know that it is transparent , stable, and predictable

not one that they will wake up one morning and interest rate has been capped, wake up the next morning and the value of the currency has jumped without any economic explanation.

Now that Ghana has built a positive trade balance, she is seeking to grow that trade balance
by seeking to increase her export values.

This is what will keep the cedis stable for a very long time.
Now Ghanaian exporters can sell their goods internationally at a cheaper rate.

vaxx2:
check their depreciated purchasing power. and then ask him how is their currency strong ?

You can't have a depreciated purchasing power with high currency. somebody must be lying some where. The goverment is simply lying to them...

yes they can have


by simply borrowing to support the currency

vaxx2:
The capping of your interest shows your goverment can politically influenced anything in your country. Your national statistics are simply lying about how rosy currency is ?. If your purchasing power is dwindling , how can you say you have a better currency...

by borrowing to support the currency
Caping inflation means that inflation cannot expose them until national revenue can no longer support debt repayment.

then they will turn to borrow new to pay old debts
Debt substitution program.

rvp2018:
Nano think it's structural and stuff like 1D1F will help. I disagree. It's not structural - otherwise kenya with Africa highest trade deficit (11B dollars) would be crying too. It's failure of of Ghana Central Banker to manage & instill confidence on the CEDIS - and stamp on dollarization of the economy. Once people lose faith in a currency - it's a free-fall - because individuals will trade or save in USD - while foreign investors will convert CEDIS to USD ASAP and send it back home to preserve value.

"We live in a country where we are overly dependent on the importation of things for our daily sustenance. Things we can produce, we continue to export them.And at the same time, we don’t generate enough export,” he said and stressed the need for public discourse to focus on addressing how the country could reduce import."

Ghana currency depreciation is a structure thing

whiles capital flight is on the lower side,
demand for dollars for import still remain high

that is why Ghana is embarking on an import substitution program


The only reason why the Kenyan case hasnt turned into another Zimbabwe is that your central bank is borrowing both domestically and foreign
hugely to support the currency.

with the knowledge i have on fiat currencies, this trend in unsustainable
it leads to more misery

pacretus:
Export by African countries, kenya=$6B
Ghana=$17B
Nigeria=$52B.

Interesting

yep

interesting

rvp2018:
Why do you guys lie when the data is our there. Most Ghanians are now keep their money in foreign currency. Foreign investors repartraite their money as soon as possible leading to capital flight. This is loop that feed itself and CEDIS continues to fall.

Evidence 1:Bank of Ghana captured this in the Banking Sector Report for September 2019 it published.

The report shows that the domestic currency component of deposits recorded a slower growth of 9.1 percent to GH¢54.8 billion in August 2019, 20 percentage points lower than the previous year’s growth; whereas, foreign currency deposits grew by 21.2 percent to record GH¢21.2 billion during the review period compared to a growth of 18.6 percent in the previous year.

you you just posted, you dont even understand

In Ghana, not one can own a dollar account unless they earn in dollars
the only reason domestic deposit did not grow much was that Ghana is in a banking crisis at the moment.

An engineered banking crisis aiming to burst a bubble in a controlled manner before it leads to a bigger crisis.

rvp2018:
Nope. Free floating currency when economic fundamentals are solid don't go on free fall - they can depreciate or appreciate in low margins. Your macro-economics are a mess - inflation, interest rates, and the 'fake' economic growth doesn't seem to help at all - the CEDIS.

Kenya is essentially free-floating currency (IMF last year disagreed and say it was managed) - but CBK does market intervention once in and a while - and it's not like our CBK manufacture USD. And there are no forex controls in Kenya.

your central bank will not even dream of freely floating your currency
because, in minute, it will become useless like Zimbabwe

how do you think they will do it?
when export is just 5 billion dollars?

You are just piling on debt you cannot pay
encourage by you politicians to support your national currency.
Just to cover for the weak fundamentals in your economy

This will end in a new Zimbabwe.

vaxx2:
i repeat again, Ghana economy is not politically massage , economics works here . the inconsistency im your purchasing power and your shilling currency shows your national statistics are simply fooling you. there may even be more lies to your GDP economy. I will check on it when I have time. your goverment are simply lying . Your currency is overvalued by 30 per cent on a purchasing power parity (PPP) basis.

Your currency was not as strong in the global market as your goverment try to paint it. is it the same currency you want to compare wirh cedis? Ghana Inflation declined from 15.4 percent in 2016 to 7.4 percent in 2019 Fiscal deficit falling from 6.5 percent to 2.4 percent in 2019, Interest rate on 91-day Treasury bill from 16.3 percent in 2016 to 14.6 percent in 2018 ..... ( 2019 is not out ) and Current Account deficit from 6.6 percent in 2016 to 3.2 percent also in 2018. How can cedi depreciation be attributed to weak fundamental?

i put it to you kenya microeconomic index is weak and the true value of its currency is not reflected .....

This can only mean, their central bank is using huge part of the borrowed money to support their currency in a pegging system.

vaxx2:
I said your currency is at worst hit . currency massaged artificially always end up in shambles at the end . go CHECK what happens to Turkey currency, which kenya is practically imitating

Cedis is in free flow , it is not massaged . your currency is not a true reflection of its value. IMF already indicate that to you.....and You guys don't even have enough extra cash to power it. Your import is far bigger than your export. The kind of currency massaging you guys practice will only increased your debt and widen your deficit.

Already you know what happen when your goverment artificially cap the interest rate . you see how your micro economy suffers particularly your private sector .


Your currency is not in anyway better than cedis which is a true reflection of its value . I even argue cedi is far more valuable than your currency cus yours is politically influence like your interest rate. "'kenya your economy suck"" ...

You goverment can only do little in terns od social development with such kind of economy. cus too much money is spend unnecessary

I am not insulting ....

If he has played house of cards before, like he will know what it means when you play with cards and all the cards are against you.

They are on a doom path if they dont stop borrowing to support the currency.

Your debt goes high, you dont produce much
so you cant service the debt.
Inflation hits and everyone suffers

rvp2018:
Yeap nobody wants to hold onto a currency not any different from Zim dollars https://www.google.com/amp/s/www.pulse.com.gh/bi/finance/bank-of-ghana-report-predicts-more-cedi-depreciation-as-depositors-switch-to-open/egf7v71.amp

One thing you dont know is that, the Cedi is still a better currency than the kshs

your currency that is on constant support because you export just 5 billion dollars whiles you import 15 billion dollars.


your economy is import-dependent
Meaning there is serious figure massaging going on in Kenya as we speak.

rvp2018:
My friend your currency is so useless most Ghanian prefer to keep the dollar.I mean something that loses value in such scale is very shocking.Even the Naira is not that bad.And this is historical problems you cannot seem to solve.Initially cedis had become so useless you started pegging to the dollar..it hasn't helped at all because now 5 cedis is equal to a dollar.Ksh is Africa strongest currency for many years now.It depreciated to the dollar in a decade from 78shs to now 100shs.We don't export lots of minerals and yet our forex reserve are 9b dollars.. more than enough to cover the min of 4 months of import.Something is wrong with Ghana macro economic.. interest rate, inflation,currency.I wonder how an investor outside natural resources would risk his money in a CEDIS not any different from Zim dollar.If you had 10m cedis five years ago and you want to reprariate back to your country, the dollar equivalent will be 2m.You would have lost 8m.Which foreign investors will keep the cedis? Stability of currency is important

cedi was never pegged to the dollar

No Ghanaian prefer using the dollar
dollar is not even a legal tender here.

this desperation of yours need to be address.

since you dont know how MOU in investment works
Let me help teach you

this is the economics of foreign exchange

https://www.youtube.com/watch?v=ig_EO805rpA

rvp2018:
Okay reading Ghana re=based GDP. The Ghanian Cedis is deteriorating every year against the USD. Something is wrong with Ghana macro-economics. In 2012 - it was nearly pegged to the dollar..then it became 1.92 in 2013, then 2.94 in 2014, then 3.78 in 2015, then 3.92 in 2016, then 4.36 in 2017, then 4.59 in 2018 and now in 2019 it's approaching 5.2.
http://www.statsghana.gov.gh/gssmain/fileUpload/National%20Accounts/Annual_2013_2018_GDP_April%202019%20Edition.pdf

freely floating currencies turn to depreciate on high speculation

that is the nature of fiat currencies

Kennyswagz2:
I don't know bro

stupid class two kid

have you lost your brother?

Kennyswagz2:
ok bro

vaxx2:
This is Tanzania job . live it for them...

when it is pitch dark

Saturdays are for relaxation

wherever the party dey, we step in

Beach properties springing up in Bortianor

vaxx2:
what do you think about the new cathedral?

not something government should be spending money on

Takoradi needs a new regional hospital

reals estate is huge in Ghana but it is part of the informal economy

vaxx2:
Tanzania what is your cement consumption rate?

below African standard

night views
national Mosque

when your cement consumption is low,
you'll be exposed as being under developed

vaxx2:
Ghana is currently expanding two major port . The one you labelled as small offices is injecting 2.3 billion dollars into the investment . we have to know how much you are investing into your port. the other Ghana port too as Takoradi is also under expansion work with cash running into hundreds of million dollars .


Ghana is also getting a fresh new harbour ......Decelopment is starting ...


for prove of information Google Takoradi expansion and Tema expansion and keta harbour

we just returned from Turkey where we spent over 200 million dollars on new heavy duty tug boats with 7 meters draft