Ghana’s recent cedi surge may have surprised market watchers, but for economist and political risk analyst Dr. Theo Acheampong, the reasons go far beyond surface-level fiscal announcements or global dollar trends. In a deep-dive discussion on Citi TV’s business talk show, The Point of View, he argued that monetary policy is the most decisive driver behind the cedi’s recent appreciation.
“We have seen the cedi trading relatively around 15.5 to the dollar. And then we’ve seen this big sharp drop in the last two and a half or so weeks, when I analyze it very carefully the sharp drop that we’re seeing cannot be fully explained by what is happening on the global market.” Dr. Acheampong noted.
While factors such as a weakening U.S. dollar and global economic jitters have played a role, Dr. Acheampong emphasized that they do not fully account for the pace or magnitude of the cedi’s appreciation. Instead, he pointed to actions by the Bank of Ghana, particularly regarding foreign exchange (FX) management and gold reserve sales.
“The appreciation of the cedi largely rests on the monetary policy measures that the central bank has been taking,” he said, stressing that the bank’s strategic sales of gold reserves have delivered a meaningful injection of foreign currency into the market.
“We have actually exported relatively more gold and therefore gotten a bit more forex inflows to support our reserves and support the currency,” he added.
He also mentioned increased forex allocations to the energy sector, such as payments to Independent Power Producers (IPPs) and fuel suppliers, as part of the reason for the recent surge in dollar supply.
“All these additional dollar inflows that have come in mean very basically you’ve got a bit more dollars within the system than you do need. And that is what is pushing the pressure to actually come down,” Dr. Acheampong said.
On the fiscal side, he acknowledged improvements, including spending cuts in the 2025 budget and positive reviews under the IMF’s Extended Credit Facility. Yet, he was certain the fiscal measures do not fully explain surge because the rate of change has been that drastic just within the last two and a half weeks.
Investor confidence, upcoming IMF inflows, and restrained government spending will continue to shape expectations. But in Dr. Acheampong’s view, “the heart of the issue” lies with monetary policy its signals, its execution, and its impact on foreign exchange availability.
