Some respite is ahead for the business community as well as all Ghanaians, as the Governor of the Bank of Ghana, Dr. Johnson Asiama, has declared that the days of excessive volatility and sharp depreciation of the cedi are gradually coming to an end.
Dr. Asiama says his leadership at the Central Bank has been very intentional in the management of the cedi and hence optimistic that the days when the local currency experienced drastic depreciation will soon be a thing of the past.
The Ghana cedi in the past weeks, to the amazement of the business community, is experiencing a very significant stability. The currency that was selling at about GHC17 to the dollar some months back is now selling at around GHC14.
The governor says this calm on the forex market is not due to artificial intervention by the Central Bank as has been practiced in times past.
Rejecting such speculations, he attributed the stability to a robust reserve build-up and strengthened forex inflows as key drivers of the recent development.
Central Bank, he say, has engaged in deliberate structural improvements and disciplined reserve accumulation.
“The stability you are seeing now it’s not because we are intervening in the market. It’s not because we are selling reserves for stability. No. Remember our reserves programme is actually going up, you know, by the day. We are building more and more reserves,” he said in an interview with Accra-based JoyNews.
As part of efforts to ensure that the calm on the forex market does not become a nine-day wonder, the Governor revealed that the central bank is no longer relying on panic interventions or depletion of reserves to shore up the cedi.
Instead, the focus has shifted to boosting sustainable inflows, improving investor confidence, and promoting a balanced exchange rate regime.
“All that we are doing is strengthening, you know, the surge in inflows. It is the combination of all these factors that you are seeing.”
With these interventions, he expressed his optimism that Ghanaians should expect a currency that is relatively stable and without any excessive volatility that can disrupt businesses and the economy at large.
But he was quick to clarify that currency stability doesn’t imply a fixed or overly appreciating cedi, warning that such a trend could also hurt Ghana’s exports.
“When we say stability, it doesn’t mean the cedi has to be fixed. It doesn’t mean that the cedi has to over-appreciate, because that in itself is not good for our exports,” he clarified.
He declared that, “All I can tell you at this point is the days of excessive volatility of the cedi are certainly coming to an end.”
This optimism and assurance from the Governor are likely to renew confidence in Ghana’s monetary management and economic outlook. Should these measures, as implemented by the Bank of Ghana, work to perfection, aside from boosting investor confidence, businesses and consumers who have been bearing the brunt of sharp fluctuations in prices, import bills, and cost of living due to currency instability will see some respite in the days ahead.
