The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, has voiced his concerns regarding the growing trend among Ghanaians to shun the use of the national currency, the cedi, in favor of foreign currencies, particularly the US dollar. He emphasized the importance of fostering confidence in the cedi and promoting its usage in domestic transactions, drawing parallels to how citizens of other nations prioritize their own currencies. Dr. Addison argued that this preference for foreign currencies contributes significantly to the cedi’s depreciation in the international market. He stressed that a collective shift in mindset and a renewed commitment to utilizing the cedi are crucial for strengthening its value and overall economic stability. This call for embracing the national currency reflects a broader concern about the psychological factors influencing exchange rate fluctuations and their impact on the Ghanaian economy.
Dr. Addison further elaborated on the detrimental consequences of Ghanaians’ reluctance to use the cedi. He pointed out that this avoidance leads to investment decisions that further weaken the currency. He believes that if Ghanaians recalibrate their perceptions and projections regarding the cedi, it has the potential to perform as strongly as any other currency. This highlights the Governor’s belief in the inherent value of the cedi and the importance of public perception in influencing its performance. He suggested that a collective embrace of the local currency, combined with sound economic policies, can reverse the current trend of depreciation and establish the cedi as a stable and reliable currency.
A key point raised by Dr. Addison was the tendency of some Ghanaians to base their expectations of the cedi’s performance on street-level speculation and informal exchange rate information rather than relying on official data and economic indicators. He expressed concern that this reliance on unofficial sources, often unreliable and prone to manipulation, contributes to negative sentiment towards the cedi and fuels its depreciation. This practice contrasts sharply with how currency expectations are formed in more developed economies, where reliance on official data and analysis is the norm. The Governor’s observation underscores the need for greater financial literacy and the dissemination of accurate economic information to the public to counteract the influence of unfounded speculation.
To counter the prevalent negative perceptions, Dr. Addison presented compelling economic data demonstrating the cedi’s underlying strength and stability. He highlighted the significant improvement in Ghana’s trade balance, with a doubling of the trade surplus compared to the previous year. Furthermore, he emphasized the substantial increase in the current account, surging from $66 million to over $2 billion in the first quarter of the year. These positive economic indicators, according to Dr. Addison, should logically support a stable and even strengthening cedi, contradicting the prevailing negative sentiment. He urged Ghanaians to consult and consider this data when forming their expectations about the cedi’s performance, rather than relying on unsubstantiated rumours and speculation.
Dr. Addison’s comments underscore a critical challenge facing the Ghanaian economy: the need to build trust and confidence in the national currency. His emphasis on the psychological dimension of currency valuation highlights the importance of public perception and behavior in influencing exchange rate fluctuations. While sound economic policies and stable macroeconomic fundamentals are essential, they are not sufficient in themselves to ensure a strong and stable currency. Public confidence, driven by accurate information and a collective commitment to using the local currency, is a crucial ingredient for achieving sustained currency stability.
In conclusion, the Governor’s address serves as a call to action for Ghanaians to actively participate in strengthening their national currency by using it in everyday transactions and basing their expectations on verifiable economic data. This shift in behavior, combined with continued improvements in the country’s economic fundamentals, can create a virtuous cycle of stability and growth, ultimately benefiting the entire Ghanaian economy. Dr. Addison’s message emphasizes the shared responsibility in maintaining a healthy and robust currency, highlighting the crucial role of public perception and participation alongside sound economic management.
