Ghana’s recent surge in cedi appreciation has sparked both optimism and caution within the financial sector, as economic analyst and lecturer Prof. Patrick Asuming weighed in on the implications of the currency’s rapid rise.
In a detailed analysis, Prof. Asuming explained that while confidence in the Ghanaian economy has indeed improved since the last election, the pace of the currency’s appreciation poses certain risks.
According to Prof. Asuming, the newfound cedi appreciation can largely be attributed to a shift in public sentiment following political change and economic policy adjustments. “The change that happened at the polls brought a change in mood. I think there’s some positivity that comes with having a new government.”
He pointed to data from the Bank of Ghana’s summary of economic and financial indicators, which reveals that between the end of 2024 and February 2025, consumer confidence rose by nearly 10 percent.
Business or producer confidence also showed a marked improvement. “There has also been some confidence in the economy that has somehow contributed to the cedi appreciation.”
However, despite these positive indicators, Prof. Asuming expressed concern over the speed of the cedi’s appreciation.
“Coming to the broader point about how quickly the cedi has appreciated, I think I will largely agree that the appreciation perhaps has gone a little too far.
“Making the currency appreciate so quickly or so sharply over a short period, I’m not sure it’s such a clever thing to do. It is as much volatility to see the currency appreciate so quickly and so sharply in a short period as it is when it goes the other way.”
Prof. Patrick Asuming
Emphasizing the importance of a more measured approach, Prof. Asuming pointed out that stability is the primary concern for markets and businesses.
He noted that the cedi had maintained a relatively steady rate between 15 and 16 over the past six to nine months, a range many businesses likely used to plan their operations for the year.
He explained that the rapid appreciation of the cedi could interfere with the financial planning and projections of many businesses.
He also raised concerns about the timing and magnitude of the Bank of Ghana’s intervention, suggesting that the decision to use reserves at this point may not be the most strategic.
While acknowledging that some external factors are contributing to the cedi’s stability, he questioned whether such aggressive action was necessary. “And then, of course, the policy change with regard to the decision to accumulate more dollar reserves, more gold reserves helped.“
BoG’s Approach Questioned Amid Cedi Appreciation
Despite recent gains, Prof. Asuming expressed concern over the Bank of Ghana’s (BoG) approach of injecting significant foreign reserves to bolster the cedi.
He cautioned that this strategy could prove counterproductive if the country encounters fresh external economic challenges.
He argued that the current conditions did not warrant such a forceful intervention, noting that the cedi was not under immediate pressure that would justify the scale of dollar support recently seen.
Prof. Asuming urged a more cautious approach, advocating for gradual appreciation that would allow Ghana to preserve its foreign exchange reserves. “Even if you wanted the cedi to appreciate, it should have been slow and steady, and definitely not to this extent, so that we keep more reserves.”
Looking ahead, he pointed to possible external factors that could strain the local currency, particularly shifts in advanced economies that may trigger renewed pressure on the cedi.
He also highlighted Ghana’s increasing external debt servicing obligations beginning next year as an additional burden. In his view, policymakers should focus on maintaining long-term currency stability rather than pursuing rapid short-term improvements.
“I would have preferred that perhaps we hold more of our reserves and hold the position so that it will be able to allow us to keep the cedi more stable around the 15 range for much, much longer. And I think that also brought the flexibility that, I mean, the predictability that businesses would expect.”
Prof. Patrick Asuming
As the debate around Ghana’s monetary policy continues, Prof. Asuming’s cautionary remarks highlight the delicate balance between currency strength and economic predictability, reinforcing the importance of strategic reserve management in a dynamic global environment.
