As Ghana’s cedi continues its recent rally against major currencies, economist and political risk analyst Dr. Theo Acheampong has pointed to two critical factors that could determine the sustainability of this upward momentum: global gold prices and the strength of the mid-year fiscal review.
Speaking on Citi TV’s business show, The Point of View, Dr. Acheampong emphasized that “if we still see the gold price being extremely high for the rest of the year, I can bet you that the currency, the cedi, is going to gain further to the dollar.”
He explained that Ghana’s gold-for-reserves program and higher international prices for gold one of the country’s key exports are bolstering foreign currency inflows and easing exchange rate pressures.
On the domestic front, the economist noted the pivotal role of the upcoming mid-year budget review in July. “If we see even better numbers on the fiscal side that positive signal will still feed through to the FX market,” Dr. Acheampong said, stressing that fiscal discipline and clear commitments to reduce government expenditure will be essential in reinforcing investor confidence.
The cedi’s volatility in recent years has made planning difficult for businesses and households alike. Dr. Acheampong cautioned against short-term spikes and drops.
“What people don’t want is the sharp dips and then subsequently it goes all the way back up again. That is no good for anyone at all.” He noted.
Ultimately, beyond the macroeconomic charts and forecasts, he highlighted the real-world impact of currency stability.
“For me, what does this do for the ordinary man on the street, my grandmother in the village, and this is where the inflation thing becomes extremely important. The end-year target is around 15% or so”. He noted.
“If this trend continues, then we should expect inflation to actually drop down further. And that is a credit to the administration and a credit to ordinary Ghanaians who have been suffering over the last two years,” he added.
As July approaches, all eyes will be on Parliament and on the price of gold as Ghana navigates a critical phase in its economic recovery.
