As the strengthening of the Ghana cedi has brought some respite to businesses and individuals, an economist at the University of Ghana Business School, Dr. Benjamin Amoah, says the surest way to sustain the stability is for the Bank of Ghana (BoG) to aggressively pursue its bullion strategy.
Dr. Amoah maintains that the recent stability of the cedi can be partly attributed to the Bank of Ghana’s (BoG) aggressive gold purchase strategy. He says it is a bold and forward-thinking hedge against global currency volatility.
Speaking in an interview with Accra-based JoyNews, monitored by The High Street Journal, Dr. Amoah asserted that while the improvement in the domestic macroeconomic environment played a key role in the recent strength of the cedi, one cannot also discount the impact of the global weakening of the U.S.
The weakening of the dollar, the economist explains, has shifted investor preference towards gold, a development Ghana is currently leveraging.
“One can attribute it to what is happening currently on the macroeconomic front of the economy. But you see, globally, the dollar has been experiencing some difficulties. So if you look at the cedi’s performance in the setting of the international currency space, you realise that naturally our currency will attract some interest,” he remarked.
As the business community has started singing the praises of the economic managers for the development, they are also calling for the sustainability of the situation.
Dr. Amoah believes this positive development can be sustained in the long run if the BoG continues to accumulate gold reserves to back the currency.
“We should not also forget the fact that once we keep on purchasing the gold, it provides some assurance and confidence to investors that our reserves are not based on the dollar, which is having a challenge on the international market, but rather based on the safe-haven currency called gold,” he indicated.
The economist argues that the Bank of Ghana’s increasing gold holdings as a major is a major credibility boost for the local currency. According to him, central banks with robust gold reserves are likely to attract stronger investor confidence, contributing to sustained currency strength.
He says, “If you have a central bank that is posting increased gold tonnage, the chances are that investors will prefer to keep their funds in such a currency.”
Ghana’s gold accumulation efforts are part of the BoG’s broader strategy under its Gold for Reserves programme, which aims to diversify foreign exchange reserves and reduce over-reliance on the dollar. The programme is also aligned with Ghana’s long-term goal of insulating its economy from external shocks and building a more resilient financial foundation.
