Currency Crisis Looms In Ghana As $1 Exchanges For 100,000 In Real Terms — Expert

A currency crisis involves the sudden and steep decline in the value of a nation’s currency, which causes negative ripple effects throughout the economy.

The Ghanaian currency is currently trading at GH₵11.3 per dollar.

But a Nigerian professor at the Carnegie Mellon University and Babcock University, Ndubuisi Ekekwe, said that Ghanaian authorities were smart when they redenominated the Cedi to equal the dollars in 2007.

In 2007, the country redenominated the Cedi such that ten thousand Cedis became equivalent to one dollar.

The re-denomination did not affect the intrinsic value of the currency – “the value will be the same,” the Ghanaian authorities said.

He said in a reaction that, “Poor Ghana: it made 1 Cedi = 1 USD in 2007 hoping that abracadabra magical algebra makes sense in global economics/currency (it was about 1 USD = 10,000 Cedi before the redenomination). But it is not just Ghana. Some Nigerian politicians promised to make 1 Naira = 1 USD.

Last year, the Cedis slumped to become the world’s worst-performing currency in 2022.

The Cedi lost 45.1 percent of its value to the US dollar in 2022 after falling to GH₵11.27 against the USD.

He explained, “1USD = 11 Cedi today. Sure, that old magic achieved something, if not 1 USD will be about 100,000 Cedi today. So, the magic saved people time from writing long digits.

“More so, it has reduced greenhouse emissions since cheque books, bank forms, etc may not need to be longer. How do you write $10,000,000 if 1 USD would have been 100,000 Cedi? On that, you commend the genius in Ghana.”

Recall that at the peak of Zimbabwe’s inflation in 2015, Zimbabwean bills were exchanged for U.S. dollars at the rate of 175 quadrillion Zimbabwean dollars for every $1.

For every 100 trillion bank notes, Zimbabweans got 40 cents in USD equivalent.