Code GHS Symbol GH₵ (Also often GH¢) Banknotes GH₵1, 2, 5, 10, 20, 50 | 1/100 Ghana pesewa Ghana pesewa Gp | |
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Coins 1, 5, 10, 20, 50Gp, GH₵1 | ||
The Ghanaian cedi (currency sign: GH₵; currency code: GHS) is the unit of currency of Ghana. It is the fourth and only legal tender in the Republic of Ghana. One Ghana cedi is divided into one hundred pesewas (Gp).
Contents
- Etymology
- First cedi 19651967
- Second cedi GHC 19672007
- Third cedi GHS 2007
- Coins
- Ghana cedi
- Exchange rate history
- References
After it gained independence Ghana separated itself from the British West African pound, which was the currency of the British colonies in the region. The new republic's first independent currency was the Ghanaian pound (1958-1965). In 1965, Ghana decided to leave the British colonial monetary system and adopt the widely accepted decimal system. The African name Cedi (1965-1967) was introduced in place of the old British pound system. Ghana's first President Kwame Nkrumah introduced Cedi notes and Pesewa coins in July 1965 to replace the Ghanaian pounds, shillings and pence. The cedi was equivalent to eight shillings and four pence (8s 4d) and bore the portrait of the President.
After the February 14, 1966 military coup, the new leaders wanted to remove the face of Nkrumah from the banknotes. The "new cedi" (1967-2007) was worth 1.2 cedi which made it equal to half of a pound sterling at its introduction. After decades of high inflation had devalued the new cedi, it was gradually phased out in 2007 in favor of the "Ghana cedi" at an exchange rate of 1:10,000. In 2007 the largest of the new cedi banknotes, the 20,000 note, had a value of about US$2. By removing four digits the Ghana cedi became the highest-denominated currency unit issued in Africa. It has since lost about 75% of its value.
Etymology
The word cedi is the Akan word for cowry shell which were formerly used as currency in what is now Ghana. The Monetaria moneta or money cowry is not native to West African waters but is a common species in the Indian Ocean. The porcelain-like shells came to West Africa, beginning in the 14th century, through trade with Arab merchants. The shells became an important currency in the slave trade. The first modern coins exclusively used at the Gold Coast was produced in 1796 but cowries was used alongside coins and gold dust as currency until 1901.
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 U.S. 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 = $1.00.
Inflation continued to eat away at the cedi's value on the black market. In the early 1980s, 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 U.S. dollar on the black market, a pack of cigarettes cost about ₵150 (if they could be found), but the bank rate continued at ₵2.80 = $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 note (the highest denomination) was demonetized. Ghanaians, in theory, could exchange any number of ₵50 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 note confiscation, the ₵20 note was the highest cedi denomination, but had a street value of only about $0.35 (U.S.)
After the ₵50 note confiscation, fears existed that the government could also confiscate the ₵20 or even the ₵10 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.
In 1991, 10, 20, 50, and 100 cedi coins were introduced, followed by 200 and 500 cedis in 1996. These six denominations were still in circulation until 2007. However, the 10 cedis (~0.1 U.S. cents) and 20 cedis (~0.2 U.S. cents) coins were not seen much due to their small value.
Third cedi (GHS), 2007–
Because of the rampant inflation in the decades before the exchange the second cedi was only worth a small fraction of its original value. The government decided to "cut" four zeros off the currency by the switch to the third cedi. The new currency was not introduced as the third cedi but is instead officially called the Ghanaian Cedi, in contrast to the second cedi that was officially known as the New Cedi. In the second half of 2007 both the second and third cedi were legal tender as the old currency were being gradually withdrawn. At the end of December 2007 more than 90% of all old coins and notes had been withdrawn. From January 2008 old banknotes could only be exchanged at banks and was no longer legal tender.
On 14 May 2010 a GH₵2 banknote was issued to meet public need for an intermediate denomination and reduce the frequency, and associated cost, of printing large volumes of the GH₵1 banknote. The introduction of the new denomination coincided with the conclusion of the year-long centenary celebrations of the birth of Kwame Nkrumah, Ghana’s first president, and has the commemorative text "Centenary of the Birth of Dr. Kwame Nkrumah".
The third Cedi has been losing value continuously since it was introduced. In 2014, the inflation rose rapidly as the value of the third cedi fell to a fourth of its original value. The fall was ended in the last quarter of 2014 as the currency stabilized due to a pending IMF bailout of Ghana.
Coins
The Bank of Ghana has been issuing all Ghanaian coins since 1958. Beside the coins in general circulation the bank have also issued commemorative coins These special coins have been issued in shillings (1958), crowns (1965), pounds (1958-1977), sikas (1997-2003) and cedis (2013-). It is unclear if the Bank of Ghana considered commemorative crowns and sikas together with the commemorative pounds that were coined after 1965 as legal tender or simply as medallions.
Only coins that have been or are in general circulation are included in this list. The years of issue does not indicated that the series have been coined every year in the period but that the coin has been issued more than once in the stated period. Some coins are held back and released years after they are issued. This means that in the general circulation there are worn out coins and coins in mint condition from the same issuing year. The Bank of Ghana has never stated if they are simply holding back already stamped coins until they are needed or if they are stamping coins successively with old issue years.
Ghana cedi
The new coins are 1 pesewa (100 old cedi), 5 pesewas (500), 10 pesewas (1,000), 20 pesewas (2,000), 50 pesewas (5,000), and 1 cedi (10,000). By 2011 the 1 pesewa had fallen out of circulation due to inflation and is mostly kept in bank vaults.