As many share their opinions on the Ghanaian Cedi’s sharp appreciation against the United States dollar and other international trading currencies, the Bank of Ghana has reiterated that the recent stability of the exchange rate is not accidental, nor is it the result of artificial interventions.
The central bank insists that, it is a cumulative impact of sound monetary policy, enhanced transparency in the foreign exchange market, and improved external sector fundamentals.
The Governor of the Bank of Ghana (BoG) has explained that it is the result of the implementation of a disciplined, market-oriented approach, reducing its reliance on reserves and instead leveraging a more efficient FX auction framework, enhanced market surveillance, and stricter alignment of foreign exchange demand with real-sector transactions.
“These measures have curtailed speculative pressures and ensured that foreign exchange flows reflect legitimate trade, investment, and remittance activity”, Dr Johnson Asiama said while speaking at the Ghana Association of Banks, Industry Thought Leadership event in Accra last week.
“In parallel, the macro-fiscal adjustment being implemented under the IMF-supported programme is yielding results, fiscal discipline is restoring credibility, and external financing flows have improved. Combined with sustained disinflation, positive real interest rates, and resilient export and remittance inflows, these developments have anchored expectations and restored confidence in the currency’s value.
“Let me be clear: we are not pursuing a rigid exchange rate target or a predetermined band. The Bank of Ghana remains committed to a flexible exchange rate regime, one that is anchored in fundamentals, responsive to shocks, and supported by credible policy tools.
“We remain vigilant and fully prepared to act in a timely and measured manner to preserve orderly market conditions and safeguard the broader macroeconomic stability necessary for financial innovation and inclusion to thrive,” he said.
This comes after the International Monetary Fund (IMF) indicated it will examine the recent currency gains during future reviews of the country’s economic reform agenda under Fund’s ongoing three year Extended Credit Facility (ECF) programme.
Speaking at a press briefing in Washington, IMF Communications Director, Julie Kozack stated that the Fund is closely tracking all key macroeconomic indicators, including exchange rate movements, to ensure that Ghana’s economic targets remain on course.
“As we look at the programme, we assess all developments including the exchange rate. Future programme reviews will allow our teams to carefully evaluate the evolving macroeconomic and financial conditions and confirm whether the programme’s targets remain appropriate and achievable,” Kozack said.
The strengthening of the cedi comes amid renewed investor confidence and improved foreign exchange inflows, but market analysts say sustained gains will depend on continued fiscal discipline and robust reforms during and after the end of the IMF-supported programme.
Some of Ghana’s top exporters are warning that the recent appreciation of the cedi may present new hurdles for the export sector if inflation remains high and economic growth stagnates again..
Anthony Pile, Founder of Blue Skies Company Ltd., in an interview last week, praised the government’s efforts to stabilise the currency but cautioned that without deeper economic reforms, the benefits could be short-lived.
“Inflation is still around 18%.. It’s very difficult to pay 18% more for inputs and have less currency coming back when you convert your earnings into cedis,” he noted.
While acknowledging that importers currently benefit from the cedi’s strength, Mr Pile highlighted the downside for exporters who earn in foreign currency.
“The importers are the winners at the moment. Fair enough, we [exporters] have had it our way for a while when the cedi was weak and the exchange rate advantage gave us a boost. But any company that relies entirely on the exchange rate for survival isn’t in a great position,” he said.
He warned that if inflation remains elevated, it could erode the gains from a stronger cedi.
“It doesn’t matter how strong the cedi is if inflation stays at 18%, people will still feel the pinch. But if we can bring it all down and keep the economy growing, then both importers and exporters can win,” he explained.
Despite the challenges, Pile expressed cautious optimism, aligning with President John Mahama’s view that a cedi-to-dollar rate between GH¢10 and GH¢12 is ideal for sustained recovery.
He added that Ghana’s long-term economic success rests on three pillars: “a stable currency, low inflation, and an economy that’s running well. Right now, it’s fair to say the economy hasn’t always been firing on all cylinders.”
By Adnan Adams Mohammed
