Economist and University of Ghana finance professor, Prof. Godfred Bokpin, has stressed that a stable Ghanaian cedi, maintained between GH¢10 and GH¢12 to the US dollar, is far more beneficial to the economy than rapid and unpredictable appreciation.
Speaking in an interview Prof. Bokpin noted that while the cedi’s recent appreciation has generated optimism, the real value lies in achieving long-term exchange rate stability that supports business planning, macroeconomic predictability, and sound central banking.
“It’s also good that there’s now some level of clarity that yes, we need to stabilise beyond the aggressive strengthening. We need to stabilise it. Stability is preferred over swings, whether appreciation or depreciation. It’s neither good for businesses nor central banking in the first place.”He noted.
Prof. Bokpin explained that economic stability does not mean a fixed rate but rather moderate and predictable fluctuations that do not disrupt planning or confidence in the market.
“Of course, we also do know that stability in economics is not the same as the same price or fixed price over time. We still expect that there will be some kind of variation in the rate, but it should not be significant enough to cause disruptions or uncertainty when it comes to planning.”
He commended the president’s recent reference to GH¢10–GH¢12 as a desirable cedi range, saying it aligns with internal policy targets that the central bank had quietly adopted earlier.
“I have indicated much earlier that the central bank was targeting the exchange rate. They didn’t want to communicate that to the market at the initial stage, so it was not just a more recent meeting where they decided on it. They knew largely where they were heading.”
Prof. Bokpin, however, raised concerns about the aggressive pace of the cedi’s appreciation earlier in the year, which he believes was influenced by deliberate interventions from the Bank of Ghana rather than natural market forces.
“That is why we said that what we witnessed in terms of the strengthening of the local currency was not just the forces of demand and supply. There were some interventions to cause the strengthening.”
He warned that such artificially accelerated appreciation undermines economic stability, as it creates confusion for businesses and weakens the overall economic adjustment process.
“We confirmed that the rate of facilitation was too aggressive to enable planning and the entire economy to adjust to the strengthening of the currency. And to that extent, you could not describe that as stability. That was more of a disruption. The disruption could cause negative or positive effects, and it was very difficult for people to play along or even plan. It was quite unsettling.”
With this perspective, Prof. Bokpin urges policymakers to prioritize consistency and transparency in exchange rate management, allowing businesses and investors to make better-informed decisions in a stable economic environment.
