The recent surge in the Ghanaian Cedi’s value against the US dollar has sparked debate about its underlying causes. Rockson-Nelson Dafeamekpor, Member of Parliament for South Dayi, attributes this positive trend primarily to deliberate policy interventions by the new Finance Minister, Dr. Cassiel Ato Forson, and the Governor of the Bank of Ghana, Dr. Johnson Asiama. He argues that their strategic measures have played a crucial role in stabilizing and strengthening the Cedi. While acknowledging the influence of external factors like the US tariff war, Dafeamekpor emphasizes the significance of the government’s proactive approach. He contends that the coordinated efforts of these two financial leaders, along with their assembled team of experts, are the driving force behind the Cedi’s resurgence. Dafeamekpor firmly believes that credit should be given where it’s due, commending Dr. Forson and Dr. Asiama for their effective management of the situation.
In contrast, financial analyst Joe Jackson highlights the significant impact of global economic forces on the Cedi’s appreciation. He points to external factors such as the decline in global oil prices and the repercussions of the US trade war as primary drivers. Jackson explains that the trade war has led to a broad depreciation of the dollar against other major currencies, indirectly benefiting the Cedi. This dollar depreciation, coupled with falling oil prices, has eased pressure on Ghana’s foreign exchange reserves, as the country requires fewer dollars to import fuel, a major component of its import bill. Consequently, this reduced demand for dollars contributes to the Cedi’s strengthening.
Jackson further elucidates how the global economic instability caused by the trade war has prompted investors to seek refuge in gold, a safe-haven asset. Ghana, being a gold exporter, has benefited from this increased demand, bolstering its export earnings and further supporting the Cedi’s rise. He stresses the importance of acknowledging both internal and external factors in understanding the Cedi’s performance. While acknowledging the astute management by the financial authorities, Jackson underlines the favorable external environment that has enabled Ghana to capitalize on these opportunities. He emphasizes that the confluence of these factors has created a positive feedback loop, contributing to the Cedi’s remarkable recovery.
The divergent perspectives offered by Dafeamekpor and Jackson highlight the complex interplay of internal and external forces influencing the Cedi’s trajectory. Dafeamekpor focuses on the proactive policies and strategic decisions implemented by the government’s financial leadership. He credits them with creating an environment conducive to the Cedi’s recovery. Specifically, he suggests that their astute management of the economy and the implementation of targeted policies have played a pivotal role in stabilizing the currency.
Conversely, Jackson emphasizes the significant influence of global economic conditions. He points to the US trade war, the resultant dollar depreciation, and falling oil prices as major factors contributing to the Cedi’s appreciation. The decreased demand for dollars for fuel imports and the increased demand for Ghanaian gold, driven by global uncertainty, have created a favorable environment for the Cedi. He acknowledges the government’s role in capitalizing on these opportunities but emphasizes the importance of recognizing the significant impact of external factors.
The current strength of the Cedi appears to be a result of a confluence of factors, both internal and external. The government’s proactive policies, combined with favorable global economic conditions, have created a synergistic effect, propelling the Cedi’s recovery. While the relative contributions of these factors remain a subject of debate, it is evident that both domestic policy decisions and external economic forces have played crucial roles in shaping the Cedi’s recent performance. A comprehensive understanding of this complex interplay is essential for accurately assessing the sustainability of the Cedi’s current strength.
