Accra:Dr. George Domfe, President of Africa Policy Lens, examines the role of Akufo-Addo's administration in the current stability of the cedi.
According to Ghana Web, the Bank of Ghana (BoG) intensified its foreign exchange interventions in April 2025 when the US dollar was trading at approximately GHS14.90. These interventions were possible due to the foreign exchange reserves of approximately US$9 billion accumulated by the end of the Akufo-Addo administration. Such reserves were crucial for financing these aggressive interventions.
Central bank interventions in the foreign exchange market are common practices to moderate volatility. However, the magnitude and sustainability of injecting approximately US$1 billion monthly into the secondary foreign exchange market raise concerns. While these interventions address immediate issues, they risk diverting focus from necessary structural reforms to boost domestic production and export competitiveness.
The concept of artificial currency stability emerges when a currency's value depends heavily on central bank interventions rather than the economy's productive capacity. The stability of the cedi remains under scrutiny, as the BoG's capacity to sustain interventions is influenced by factors like rising international gold prices and Ghana's external debt restructuring, which provided temporary relief.
Debt restructuring, though providing temporary breathing space, does not eliminate obligations. As these obligations increase from 2027, sustaining current intervention levels may become challenging. A durable solution for currency stability requires expanding domestic production, reducing import reliance, and strengthening export capacity.
Ghana's past episodes of currency stability, influenced by favorable conditions and policies, suggest that the current cedi appreciation should not be seen as a solution to structural challenges. Initiatives like direct trade with China using the cedi and the GoldBod's role in the gold value chain could support foreign exchange supply but must complement broader structural reforms.
For lasting exchange rate stability, Ghana must focus on enhancing agricultural and manufacturing sectors to reduce import dependence and increase foreign exchange generation. Sustainable currency stability relies on strong domestic production, diversified exports, and sound macroeconomic management rather than excessive central bank interventions.