Ghana Cedi Defies Global Trends as Strong Internal Policies Drive Currency Gains
A Financial Economist with the University of Ghana Business School, Professor Lord Mensah, has attributed the Ghana cedi’s recent appreciation to deliberate internal policy interventions, despite global trends showing a weakening US dollar against other major currencies.
Speaking to current developments in the foreign exchange market, Prof. Mensah noted that while the depreciation of the US dollar is a global phenomenon, the rate of appreciation of various currencies varies depending on each country’s internal fiscal and monetary management.
“It is true the dollar is depreciating globally. But the impact differs depending on how individual countries manage their economies,” he explained. “Countries depending heavily on their dollar reserves will have different levels of exposure. That means internal policies are what determine how much their currencies appreciate relative to the dollar.”
Ghana’s performance, he noted, reflects a level of internal discipline and policy effectiveness that is currently positioning the cedi as one of the better-performing African currencies.
Prof. Mensah also called attention to potential data discrepancies that may arise from the timing of official updates. Specifically, he raised concerns about the timing of Bank of Ghana’s reserve updates, which may not yet reflect recent gold purchases under the Gold-for-Oil or Gold-for-Reserves programs. “We may have to appreciate the last time BoG updated its reserve data to accommodate Goldbod purchases. The difference is too much,” he noted, urging caution in drawing conclusions based solely on current reserve figures.
He further emphasized that in stabilizing a currency, financial market indicators must perform well as a precursor to real sector recovery. “In the currency stabilization process, financial indicators must look good for the real sector to follow,” he said. “Let’s pray that government policies in the real sector perform well so we can sustain this stability to the end of the fiscal year.”
His comments come as the cedi continues to show resilience against the dollar, with analysts and rating agencies acknowledging Ghana’s relative currency strength amidst global economic uncertainties.
