Ghanaian cedi

Infobox Currency
image_1 = 50 cedis.jpg
image_title_1 = 50 cedis
iso_code = GHS
using_countries = flag|Ghana
inflation_rate = 10%
inflation_source_date = " [https://www.cia.gov/library/publications/the-world-factbook/fields/2092.html The World Factbook] ", 2007 est.
subunit_ratio_1 = 1/100
subunit_name_1 = pesewa
symbol = GH¢
used_coins = 1, 5, 10, 20, 50 pesewa, 1 cedi
used_banknotes = 1, 5, 10, 20, 50 cedi
issuing_authority = Bank of Ghana
issuing_authority_website = www.bog.gov.gh

The cedi is the unit of currency of Ghana. One cedi is divided into one hundred pesewas. The present cedi was introduced on July 3, 2007, and was equal to 10,000 old cedi when redenomination saw four zeros lopped off the value. It was the highest valued currency unit issued by sovereign countries in Africa in 2007.

The word "cedi" is derived from the Akan word for cowry shell. Cowry shells were once used in Ghana as a form of currency.

A number of Ghanaian coins have also been issued in Sika denominations. These are probably best considered as "medallic" coinage, and may have no legal tender status. The word sika means "money".

Currency sign

The Ghanaian cedi (GHS) symbol resembles the cent sign (¢), but it is taller, narrower, and its bar is vertical, not diagonal. The symbol unicode|₵ was accepted for encoding in Unicode as U+20B5 in 2004. However, because many fonts do not provide this character, the cent sign is often used as a replacement for the cedi.

The cedi sign is not to be confused with the colón sign Unicode|₡, which has a code point U+20A1 in Unicode (or 8353 in decimal); or the cent sign ¢, which has a code point U+00A2 in Unicode (or 162 in decimal).

History

"For earlier Ghanaian currency, see Gold Coast ackey."

First cedi, 1965-1967

The first cedi was introduced in 1965, replacing the pound at a rate of 2.4 cedi = 1 pound, or 1 pesewa = 1 penny. The first cedi was pegged to the British pound at a rate of 2.4 cedis = 1 pound.

Second cedi (GHC), 1967-2007

The first cedi was replaced in 1967 by a 'new cedi' which was worth 1.2 first cedis. This allowed a decimal conversion with the pound, namely 2 second cedis = 1 pound. The change also provided an opportunity to remove Kwame Nkrumah's image from coins and notes.

The second cedi was initially pegged to the British pound at a rate of 2 cedi = 1 pound. However, within months, the second cedi was devalued to a rate of 2.45 second cedi = 1 pound, less than the value of the first cedi. This rate was equivalent to 1 cedi = 0.98 US dollars and the rate to the dollar was maintained when the British pound was devalued in November 1967. Further pegs were set of $0.55 in 1971, $0.78 in 1972 and $0.8696 in 1973 before the currency was floated in 1978. High inflation ensued, and so the cedi was re-pegged at 2.80 cedi = $1.00.

Inflation continued to eat away at the cedi's value on the black market. In the early eighties, the government started cracking down hard on the retail of products at prices other than the official established sale price (price controls). This had the effect of driving nearly all commerce underground, where black market prices for commodities were the norm, and nothing existed on store shelves. By 1983, the cedi was worth about 120 to one US dollar on the black market, a pack of cigarettes cost about 150 cedis (if they could be found), but the bank rate continued at 2.80 cedis = $1.00. Finally, with foreign currency completely drying up for all import transactions, the government was forced to begin a process of gradual devaluation, and a liberalization of its strict price controls. This process ended in 1990 with a free float of the cedi against foreign currencies. Inflation continued (see exchange rate chart) until by July 2007, the cedi was worth about 9500 to one US dollar, and a transition to the third cedi was initiated.

In 1979, a currency confiscation took place. New banknotes were issued which were exchanged for old at a rate of 10 old for 7 new. Coins and bank accounts were unaffected.

A second confiscation took place in 1982, when the 50 cedi note (the highest denomination) was demonetized. Ghanaians, in theory, could exchange any number of 50 cedi notes for coins or other banknotes without loss, but foreigners could not make any exchange. However, many Ghanaians who were hoarding large amounts of Cedis feared reprisal if they tried to convert all of it, and so simply burned a lot of their money. Many other Ghanaians received "promise payment notes" from the banks, but never received compensation. This confiscation was publicly justified as a means to create a disincentive for the flourishing black market. However, from a monetary perspective, currency confiscations have the effect of reducing the available cash in the economy, and thereby slowing the rate of inflation. After the 50 cedi note confiscation, the 20 cedi note was the highest cedi denomination, but had a street value of only about $0.35 (US).

After the 50 cedi note confiscation, fears existed that the Government could also confiscate the 20 or even the 10 cedi notes. This fear, along with inflation running at about 100% annually, started causing Ghanaian society to lose its faith in its own currency. Some transactions could only then be done in foreign currencies (although that was technically illegal), and other more routine transactions began to revert to a barter economy.

Third cedi (GHS), 2007-

On July 3, 2007, a third cedi was introduced, worth 10,000 second cedis.cite news|url=http://www.ghanacedi.gov.gh|title=Government website on redenomination|publisher=Bank of Ghana|accessdate=2007-06-19] The external purchasing power of the old and new currencies are the same; the cedi was neither devalued nor re-valued, only redenominated. Because of this change, Ghana's currency became one of the highest valued currency units from one of the least valued currency units.

A new ISO currency code GHS was also introduced on this date. In addition, the central bank named the third cedi the Ghana Cedi and assigned the symbol GH¢ to distinguish it from the second cedi, currently known as the cedi with the symbol ¢. The Ghana cedi will, from January 2008, be simply known as the cedi. cite news|url = http://www.ghanacedi.gov.gh/privatecontent/File/Redenomination%20of%20the%20cedi.pdf|title=Central Bank website on redenomination|publisher=Bank of Ghana|accessdate=2007-07-11]

Coins

First cedi

First cedi coins were issued in denominations of 5, 10, 25 and 50 pesewas. Smaller denominations were not needed as the ½ and 1 penny continued to circulate as ½ and 1 pesewa. All coins bore the portrait of Kwame Nkrumah.

econd cedi

Third cedi

ee also

* Highest valued currency unit
* Economy of Ghana
*Previous Ghana currencies:
** British West African pound
** Ghanaian pound

References

External links

Standard numismatics external links
world_coin_gallery_1_url = Ghana
world_coin_gallery_1_name = Ghana
banknote_world_1_url = ghana
banknote_world_1_name = Ghana
dollarization_1_url = gh
dollarization_1_name = Ghana
gfd_1_url = Ghana
gfd_1_name = Ghana
gfd_data_1_url = 6132
gfd_data_1_name = Ghana Cedi
show_gfd_excel = Y
* [http://www.bog.gov.gh/aboutus/currency.htm Information on the Cedi] , Bank of Ghana
* [http://www.ghanacedi.gov.gh/ Information on the new cedi issue]