Keypoints:
- BoG credits strong macro policies for cedi rally
- Reserves surpass $10bn, driven by gold and cocoa
- FX market reforms boost confidence and reduce pressure
IN a year marked by macroeconomic volatility across emerging markets, Ghana’s currency has been a rare success story. The cedi has appreciated by 12.2 percent against the US dollar since January, and while some analysts and market watchers remain sceptical about its durability, the Bank of Ghana (BoG) is standing firmly behind the gains.
According to First Deputy Governor Dr Zakari Mummuni, the appreciation is not a fluke but a reflection of sound monetary policy, structural reforms, and stronger reserve buffers that the central bank has worked diligently to build.
‘We’ve seen over 12 percent appreciation this year alone, reversing last year’s 13 percent depreciation. That’s unprecedented,’ Dr Mummuni said in an exclusive interview with PM Express Business Edition on JoyFM in Accra on Thursday.
BoG builds reserves without external debt
The Deputy Governor stressed that the currency’s performance was not the result of artificial intervention. Instead, the Bank has accumulated more than $10bn in foreign reserves, largely through domestic strategies rather than external borrowing. He noted that the figure is expected to exceed $11bn by the end of the second quarter, placing Ghana well above its IMF reserve target of three months’ import cover.
‘These are not debt-driven reserves. They’re being built from strong FX inflows—from cocoa, gold and remittances. We’ve already achieved the IMF reserve target,’ he said.
A major contributor to this buildup is the Domestic Gold Purchase Programme, which has grown Ghana’s bullion reserves from just 8.7 tonnes in 2021 to over 31 tonnes today. But BoG has strategically diversified the reserves into dollar-denominated assets, shielding the country from short-term gold price volatility.
Reforms ease pressure on BoG
Another game-changing move, according to Dr Mummuni, is the BoG’s decision to eliminate distortions in foreign exchange pricing. By aligning the Bank’s exchange rate with market rates, the cedi now trades at a converged, transparent value, removing arbitrage opportunities and speculation that previously plagued the FX market.
‘There’s no longer a separate “Bank of Ghana dollar”. A dollar is a dollar across the market. This convergence has removed unnecessary pressure on our reserves,’ he explained.
These reforms have created a more efficient and transparent FX environment, reducing dependency on the central bank for foreign exchange while improving confidence among investors and businesses.
Coordinated fiscal and monetary discipline
Dr Mummuni pointed out that Ghana’s fiscal consolidation efforts are working in tandem with tight monetary policy to reinforce market stability. The country has significantly slowed public sector borrowing, while the BoG has intensified liquidity sterilisation to remove excess cedis from the system.
‘We’ve sterilised three times more liquidity than last year,’ he said. ‘And our tight monetary policy is re-anchoring inflation expectations.’
Inflation, which stood at nearly 24 percent earlier in the year, has eased to 21.2 percent. Dr Mummuni expressed optimism that the BoG can achieve its 12 percent inflation target by year-end, with the possibility of hitting single digits by the first quarter of 2026 if food inflation declines further.
Risks remain—but buffers hold
Acknowledging that risks from global markets—including a stronger US dollar or a correction in gold prices—could pose headwinds, Dr Mummuni said Ghana is prepared.
‘The market is smart. If we were simply burning reserves to hold the cedi, traders would see through that. But they haven’t—because this time is different,’ he said.
He also hinted that the BoG is reviewing hedging strategies to mitigate potential shocks from commodity price volatility.
Commitment to transparency, not controls
While some have called for tighter control over forex operations, the Deputy Governor was firm in stating that Ghana will not return to a currency control regime.
‘We’re committed to durable, market-based reforms—and we have what it takes to maintain stability,’ he said.
Instead, BoG is tightening regulatory oversight of forex bureaux and reinforcing public engagement to ensure compliance, boost confidence and limit black market activity.
‘We will stop at nothing to ensure that the cedi continues to be stable going forward,’ Dr Mummuni said.
‘There’s no need to panic. This rise is backed by fundamentals.’
