The Institute for Statistical, Social, and Economic Research (ISSER) has urged the Ghanaian government and relevant stakeholders to adopt a more rigorous exchange rate management framework to sustain the recent appreciation of the Ghanaian cedi.

The call comes in response to the cedi’s improved performance against major international currencies, reversing months of steady depreciation that had strained the local economy.

Speaking at the launch of the Mastercard Foundation Youth Futures Initiative and Stakeholder Engagement in Accra, the Director of ISSER, Professor Peter Quartey, stressed the importance of consistent macroeconomic and monetary policies to support the cedi’s newfound strength. He emphasized that without robust policy backing and regulatory enforcement, the currency’s current appreciation may be short-lived.

“To ensure stability in our exchange rate, we have to continue with the kind of monetary policies we are having now. The Bank of Ghana must continue to shore up our gold reserves and take advantage of current geopolitical shifts, such as the temporary weakening of the US dollar. However, we must also prepare for any potential reversal of these trends, especially now that the US has secured a temporary trade deal with China.”
Professor Peter Quartey

Enforcement of Exchange Rate Rules

One of the key concerns raised by ISSER is the lack of enforcement of foreign exchange regulations in Ghana. Prof. Quartey lamented the ease with which foreign currencies such as the US dollar and the British pound can be obtained on the streets of Ghana without proper documentation or oversight.

“It is only in Ghana where one can walk to a corner and buy dollar and pound and walk around with it,” he noted. “In other jurisdictions, authorities take your passport or require documentation to monitor what the currency is being used for.”

According to ISSER, tightening the enforcement of exchange rules will not only limit the underground market’s influence but also ensure that foreign exchange transactions are conducted transparently and with a focus on the broader economic interest.

Public Expectations and Price Adjustment

The recent resilience of the cedi has rekindled public expectations for a reduction in prices of goods and services, particularly for imported items. Many consumers argue that traders were quick to raise prices when the cedi depreciated and should now be equally responsive in reducing them as the currency strengthens.

Commenting on this development, Prof. Quartey acknowledged that public expectations are justified but noted the complexities involved. “It’s justified to some extent in the sense that in Ghana we know prices are sticky downwards,” he explained.

“Anytime the exchange rate depreciates quickly, traders increase prices. But as soon as it appreciates, then there is some sluggishness in reducing prices. However, we also appreciate the fact that some traders have imported goods using the old exchange rates.”
Professor Peter Quartey

This “price stickiness” phenomenon — where prices are slow to decrease even when costs decline — has long been a feature of Ghana’s economy and adds another layer of difficulty in managing inflation expectations.

The Ghanaian cedi’s recent gains have been attributed to a mix of policy interventions by the Bank of Ghana, improvements in gold-for-oil barter arrangements, and a favorable shift in global currency markets. However, experts including ISSER believe that without firm and proactive measures, these gains may prove temporary.

For sustainable currency stability, ISSER is recommending an integrated approach that includes strengthening the country’s foreign exchange reserves, enhancing enforcement of foreign currency regulations, maintaining macroeconomic policy consistency, and addressing pricing behaviors in the market.

As Prof. Quartey aptly put it, “We need to anchor confidence in the local currency. That confidence comes from clear, consistent policies and the assurance that rules are being enforced to create a level playing field.”