Professor William Baah-Boateng, the Vice-Chancellor of the Methodist University of Ghana and a seasoned economist, has identified the current surge in global gold prices and strategic reserve accumulation as the primary drivers behind the Cedi’s recent appreciation.
Speaking at a high-level roundtable discussion titled “John Mahama 2.0: A thematic assessment of year one,” the academic luminary argued that the extractive sector has provided the necessary fiscal oxygen to stabilize the local currency.
He highlighted that the synergy between the government’s trade policies and the Bank of Ghana’s interventionist strategies has successfully harnessed the windfall from the mining industry, allowing the external sector to act as a robust shield against the volatility that previously hampered the national economy and domestic business planning.
“What caused the Cedi appreciation? One of them is favourable gold and cocoa prices. Also, the government ensured that, together with the Bank of Ghana, we accumulated our reserves.”
Professor William Baah-Boateng
Expanding on this economic shift, the Professor emphasized that the upward trajectory of gold which recently reached historic highs has significantly bolstered Ghana’s balance of payments.
As the continent’s leading producer, the nation has leveraged these “favorable commodity prices” to enhance its gross international reserves, which climbed toward $11.4 billion by the final quarter of 2025.
This aggressive reserve accumulation, supported by the Gold-for-Oil and domestic purchase programs, has allowed the central bank to intervene decisively in the foreign exchange market.
By channeling gold export revenues through official state channels, the government has minimized the “smuggling and leakage” that previously drained foreign exchange, thereby creating a robust buffer that enables the Cedi to withstand global financial shocks and maintain its current trajectory of appreciation against the dollar.
Mechanics of Gold-Driven Currency Stability
The correlation between soaring gold prices and the Cedi’s performance is rooted in the increased inflow of “non-debt foreign exchange.”
When global demand for gold rises, the value of Ghana’s exports surges, as evidenced by the $897.6 million in gold exports recorded in a single month during the first half of 2025.
This influx of United States dollars reduces the scarcity of foreign currency in the local market, naturally driving down the exchange rate. Furthermore, the Bank of Ghana’s domestic gold-buying strategy has transformed the metal into a strategic liquid asset.
By holding more than 37 tonnes of gold in its vaults, the central bank has improved its “reserve adequacy,” giving it the “fiscal autonomy” to support the Cedi without relying solely on expensive external borrowing or Eurobond market conditions, which often come with high interest rates and restrictive conditionalities.
Strategic Interventions and Market Management
Central to this stability is the transition toward a “managed floating” exchange rate regime, where the Bank of Ghana uses its gold-backed reserves to prevent excessive currency swings.
Prof. Baah-Boateng defended this intervention as a “legitimate part of exchange rate management,” arguing that the central bank cannot remain passive when market volatility threatens business planning.
The integration of the Artisanal and Small-scale Mining (ASM) sector through the GoldBod initiative has been pivotal, formalizing nearly 40 additional metric tons of gold that were previously smuggled across borders.
This formalization alone generated approximately $3.8 billion in additional foreign exchange inflows, providing the liquidity needed to satisfy the demand from importers and corporate entities, thus maintaining the Cedi’s position as one of the world’s top-performing currencies in 2025.
Sustaining the Golden Momentum
To ensure the sustainability of these gains, extractive experts and economists advocate for a deeper commitment to value addition and structural transparency.
While favorable prices provide a temporary windfall, long-term stability requires “strengthening the recording and monitoring of gold trade statistics” to eliminate trade misinvoicing and illicit financial flows.
Experts suggest that Ghana must move beyond the export of raw doré bars by investing in local refineries and jewelry manufacturing, which would retain more value within the domestic economy.
Additionally, implementing a “hedging program” for gold exports could protect the nation’s revenue from potential price corrections in the global market.
By locking in minimum prices and enforcing stricter traceability through nationwide digital systems, Ghana can ensure that its gold resources continue to serve as a reliable foundation for macroeconomic resilience regardless of future price fluctuations.
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