THE KEY DRIVERS OF THE EXCHANGE RATE DEPRECIATION IN GHANA

The main purpose of this study is to determine the key variables that influence the frequent exchange rate depreciation in Ghana. The study uses time series data for all the variables for the period of 1980 to 2015. The data for the study period is processed by taking natural logarithm of all the variables. The study employs the Backward Elimination and Stepwise Regression method. The findings of the study suggest that agricultural output, industrial output, services output and exports have been the variables which have significantly affected the exchange rate of the Ghana Cedi against the dollar during the years under review. The results of the study suggest that to ensure a stable Ghana Cedi, policies should be directed to grow the Ghanaian economy from an import-driven one to an export driven economy through massive investment in its key sectors of the economy. This will bring more foreign exchange earnings into the Ghanaian market.