The recent sharp appreciation of the Ghana cedi is largely due to increased dollar inflows from cocoa exports, remittances, and rising gold prices, not solely the Bank of Ghana’s (BoG) policy rate or speculative market sentiment, says economist Prof. Atsu Amegashie.
In an article, Prof. Amegashie cautions against oversimplified explanations for the cedi’s performance and urges a return to basic economic fundamentals — demand and supply of foreign exchange.
“There is a large and perennial excess demand for dollars in Ghana. Unless more dollars enter the system, the cedi cannot gain value. If it does, then we must ask what has increased dollar supply,” he argued.
Citing a recent interview with BoG’s First Deputy Governor, Dr. Zakari Mumuni, Prof. Amegashie noted that over $1.3 billion in cocoa revenue and strong remittance inflows were key contributors to the cedi’s resilience in 2025.
Dr. Mumuni further stated that the BoG was accumulating reserves faster than expected, without aggressively injecting dollars into the market. However, this position contrasts with a Joy News report that the central bank injected nearly $490 million in April alone to stabilize the currency.
Prof. Amegashie clarified that both claims could be valid: “The BoG can intervene in the market and still build reserves if forex inflows from exports and remittances outpace interventions.”
Data from the Gold Board supports this, showing that gold exports surged to 9,295 kg in April, the highest monthly volume since January 2023, with a 20.8% spike in dollar revenue, thanks largely to a 9.2% rise in global gold prices.
Despite a modest 0.36-tonne increase in BoG’s gold reserves for April, total foreign reserves now exceed $10 billion, equivalent to 3.7 months of import cover, surpassing the IMF’s minimum target of three months.
Prof. Amegashie also defended BoG’s strategic use of reserves, especially through ongoing dollar sales to Bulk Oil Distributors to ensure fuel imports — vital for power generation and economic productivity. He argued that using “excess” reserves for essential imports is sound policy, not reckless depletion.
Fitch Solutions has projected the cedi to close 2025 at GH¢15.50 to $1, while ABSA forecasts GH¢14.00. Prof. Amegashie concluded that maintaining robust inflows, not merely policy tightening, will be key to sustaining currency stability.
