Ghana’s local currency, the cedi, has shown a surprising level of appreciation in recent times—a trend that has sparked analysis and debate among financial experts.
One such voice is Joe Jackson, Chief Operating Officer of Dalex Finance, who attributes the cedi’s strength to a unique blend of global economic shifts and disciplined local responses, declaring that “the stars aligned for Ghana.”
According to Joe Jackson, the Ghanaian cedi’s recent appreciation is not merely the result of luck, but a convergence of favourable global dynamics that played to Ghana’s advantage. He emphasized three key international developments that contributed significantly to this shift.
Firstly, the depreciation of the US dollar has worked in Ghana’s favour. “The dollar has weakened against major currencies,” Jackson noted, “due in part to ongoing trade tensions, particularly during the Trump era.” The depreciation improved the comparative value of emerging market currencies like the cedi, giving Ghana some much-needed breathing room in managing its foreign exchange obligations.
Secondly, the global decline in oil prices brought further relief. Oil is Ghana’s single largest import, and falling prices reduced the country’s import bill and demand for foreign currency. With less pressure on its reserves, the cedi was able to hold firm and even gain ground.
Lastly, a surge in gold prices added strength to the economy. As investors globally sought safe-haven assets amid market volatility, gold prices rose sharply. “The icing on the cake,” Jackson stated, “was the appreciation of Ghana’s gold reserves, which are held by the central bank.”
Strategic Internal Policies by the Bank of Ghana
While acknowledging the importance of external conditions, Mr Jackson was quick to credit Ghana’s internal economic discipline as a critical factor that allowed the country to capitalize on the moment. He singled out the proactive efforts of the Bank of Ghana (BoG), especially in managing the country’s gold reserves.
“Our central bank has consistently sought to increase its gold reserves,” he explained. “By doing that, it was taking advantage of the stars aligning.” Over the last eight years, gold has outperformed the dollar by over 100%, a fact that BoG strategically leaned into. This has not only shored up Ghana’s foreign reserves but also improved investor confidence in the local economy.
Moreover, the implementation of initiatives such as the Gold-for-Oil programme and the gold-backed bond system—commonly referred to as “goldbod”—has played a pivotal role in preserving the value of Ghana’s exports while reducing dependency on foreign currencies. Jackson stressed the need for these programmes to be managed transparently and with accountability to maximize their benefit.
The Role of Accountability and Transparency
Mr Jackson did not shy away from pointing out the importance of transparent governance in ensuring long-term sustainability. He argued that internal discipline, especially in the extractive sector, has helped Ghana retain greater value from its natural resources.
“The issue of goldbod and its implementation—possibly in a transparent and accountable manner—meant that we were going to retain far more value in our gold,” Mr Jackson explained. This approach, he said, reflects a new era of prudence in Ghana’s economic management.
Such fiscal discipline, according to Jackson, is the foundation that allows a country to respond effectively when external conditions become favourable. Without it, even the most advantageous global trends can slip through the fingers of a disorganized economy.
While the cedi’s appreciation is a welcome development, he cautioned that Ghana must not become complacent.
“We are in a good space,” Jackson noted. “But we must recognize that it took both good fortune and sound policy to get here.” For Ghana to maintain and even build on these gains, continued investment in economic reform, monetary policy discipline, and resource transparency will be essential.
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