There has been quite a lot in the news lately about the Ghanaian cedi falling to record low levels. It was this tweet from one of my Ghana Tweeps (Twitter-peeps) that got me thinking about the freefalling cedi:
So what exactly does happen to the cedi in election years? Thanks to my big brother who introduced me to Oanda and their amazing currency tools, I was able to find out. The graph below shows the value of one US dollar to the Ghanaian cedi from January 2000 to March 2012. Calculations were based on the old Ghana cedi exchange rate since the conversion to the new Ghana cedi took place within this period. The y-axis shows the increase in numeric value of the cedi. At the start of the graph back in January 2000, 1 USD = 2,500 cedis (approximately). By March 2012, the exchange rate was 1 USD to 17,279.4 cedis (1,73 GHS).
|Historical Currency Rate (picture is a weird size)|
Interestingly, Kwabena was right. The cedi did drop in value dramatically in 2000 and 2008 which were both election years. Very curiously, the cedi remained quite stable against the dollar in 2004 which was also an election year. So economist types, please tell me, why does the value of the cedi drop during an election year? In other words, why does the cedi have election year blues?