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By Dr. S. Kwaku Afesorgbor, Centre for Trade Analysis and Development The depreciation of the Ghanaian Cedi has now become a perennial crisis. Overtime, we have come to the realization that the depreciation of the currency is structural and not necessarily due any form of mismanagement of the economy by the government in power. This mainly because this trend of annual depreciation is historical and successive governments have failed to stall its occurrence. Ghana’s current vice president, Dr. Bawumia, in a series of public lectures, highlighted the discrepancy between the exchange rate and inflation. Figure 1 below provides anecdotal evidence of the continuous discrepancy between inflation and exchange rate overtime in Ghana. Discrepancy between inflation and exchange rate The theoretical underpinning of the relationship between inflation and exchange rates is the relative purchasing power parity (PPP). Through PPP, the appreciation or depreciation of the exchange rate shoul...