Ghana’s cedi currency will shed four zeros next July, a central bank official said on Monday, and shoppers weary of carrying big bundles of bank notes welcomed the plan.
Residents of the West African country complain a combination of low-denomination notes and the low value of the cedi — a result of high and sustained inflation in the past — obliges them to carry bags full of tattered currency.
”We will be setting the current 10 000 cedis to one of the new Ghana cedis,” Ernest Addison, the bank’s head of research told local radio station Joy FM.
”It is not a revaluation. It is a redenomination,” he told Reuters later. ”Depending on the exchange rate in July, the old currency will just translate into the new one.”
One United States dollar is currently worth 9 200 cedis.
A board member of the cocoa industry regulator Cocobod said the redenomination would not affect transactions in the sector, one of the lynchpins of Ghana’s economy.
”It is very simple, you are just dividing everything by 10 000 cedis. They are just reducing the zeros to make it easier for people. It won’t make any difference,” Robert Kwabena Poku Kyei, a Cocobod board member and cocoa expert at the ministry of finance, told Reuters.
Ghana’s highest denomination note is currently 20 000 cedis — barely $2.
Automatic cash points at the country’s banks dispense up to 40 notes at a time, giving a maximum of 800 000 cedis, just short of $90. Bank tellers regularly hand over cash to clients in black plastic bags.
”It will help us in so many ways, in helping us to buy things,” Barbara Brown-Nettey, a 31-year-old secretary in the capital Accra, said of the redenomination plans.
Addison at the central bank said the move should not affect business.
”Assuming you had export receipts of some $100, you will get 92 cedis as opposed to 920 000, but all your domestic costs will be translated as well,” he said, adding there would be a transition period of six months, when both old and new cedis would be in circulation.
Addison said economic stability would help the switchover. Growth for the year is forecast at 6,2% and year-on-year inflation stood at 10,5% at the end of October.
”There is enough policy credibility in place now … this is the time to deal with this baggage of currency zeros,” he said. – Reuters