The indirect impact of exchange rates and their fluctuations extends much more broadly and deeper in ways that affect several of the most important aspects of our economic lives such as how long it takes to get a job, where we can afford to live, and when we can retire.
Exchange rates have a tremendous influence on the economy both in the near term and over prolonged periods of time as changes in exchange rates may not seem to affect most people in their everyday lives, but indirect effects are more widespread than many realize.
When exchange rates change, the prices of imported goods will change in value, including domestic products that rely on imported parts and raw materials. Exchange rates also impact investment performance, interest rates, and inflation, and can even extend to influence the job market and real estate sector.
In this era of globalization, goods from other countries are as commonplace, or sometimes even more commonplace, than those produced domestically. Exchange rates have a significant impact on the prices you pay for imported products.
This means that a weaker domestic currency suggests that the price you pay for foreign goods will generally rise significantly. The change in the price of imported products depends on how the currencies of the exporting nations (those from where these products have been sourced) have fared against the domestic currency.
One of such trades that have been heavily affected by the recent fall of the Cedi to major currencies is the meat industry as cows, goats and other animals are imported into the country from other parts of the Sub-region, in particular neighbouring Burkina Faso which trades in CFA franc.
Butchers across the country are lamenting that the exchange rates have a significant impact on the prices they pay for imported products and the fact that they import the cows from Burkina Faso was impacting negatively on their business.
They intimated that comparing the previous price to this year, they noted that the former was better, adding that customers were unable to buy the meat these days owing to the price hikes from GHc 18 to GHc 22 per 1 pound.
Alhaji Abu Anama, Chairman of the Sekondi-Takoradi Butchers Association in the Western Region in an interview with igoghana expressed worry over the slow pace of sales after seeing COVID-19 restrictions being eased.
“COVID-19 was limiting the market hoping that the release of the restrictions by the President will bring relief, but our expectations have turned otherwise”, he stressed.
He explained that they were still in business because restaurants, pubs and chop bar businesses were buying the meat in higher quantities without which they would have been out of business.
“Now, we do not know what to do, individual buyers are not buying, currently one cow costs GHc 10,000 which is a huge sum of money”, he lamented.
Alhaji Anama pleaded with the Government to intervene in the unstable nature of the CFA franc over the Cedi to help ease the cost involved in their business.
Massa Hudu at the Kaneshie Meat Shop located in the Kaneshie Market in the Greater Accra Region disclosed that they have tried accessing loans from the banks to support their meat business but to no avail and therefore called on the government to support them with soft loans to sustain their business.
“We really need a loan for this business, else I will personally stop this work. That is why we are calling on the government to help us with loans to boost our business due to the uncontrolled increase in the exchange rate”, he stated.