The Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama, addressed the recent surge in the cedi’s value against the US dollar, emphasizing the Bank’s focus on stability rather than targeting specific exchange rates. During a press conference following the Monetary Policy Committee (MPC) meeting, Dr. Asiama clarified that the BoG does not have a predetermined appreciation target for the cedi and will not intervene to influence its trajectory based solely on reaching a certain level. While acknowledging the importance of preventing excessive depreciation, he stressed that the Bank’s primary objective is to manage volatility and ensure the exchange rate fluctuates within reasonable bounds. This approach prioritizes overall market stability and avoids artificial manipulation of the currency’s value.
Dr. Asiama attributed the cedi’s remarkable appreciation to a confluence of factors, including robust international reserves, the effectiveness of implemented monetary policies, and positive market sentiment generated by both monetary and fiscal measures. He highlighted the increasing significance of market perception, suggesting that growing confidence in Ghana’s economic outlook is playing a crucial role in the cedi’s upward trajectory. This positive sentiment, coupled with strong fundamentals, has created a favorable environment for the currency’s performance. He cautioned against market speculation, emphasizing that the Bank is not involved in such activities and is committed to maintaining stability.
The Governor’s statements reflect a shift towards a more market-driven approach to exchange rate management. Instead of rigidly defending a specific rate, the BoG is focusing on creating a stable macroeconomic environment that fosters sustainable currency appreciation. This strategy acknowledges the influence of market forces and recognizes that attempting to control the exchange rate through direct intervention can be counterproductive and ultimately unsustainable. The Bank’s focus on building strong reserves and implementing sound monetary policies serves as a foundation for long-term currency stability.
The recent data released by the Bank of Ghana provides further context for the cedi’s performance. As of May 22, 2025, the cedi had appreciated by an impressive 24.1% against the US dollar, a testament to the effectiveness of the Bank’s policies and the positive market sentiment. Furthermore, Ghana’s international reserves stood at a healthy $10.6 billion at the end of April 2025, providing a substantial buffer against external shocks and bolstering confidence in the cedi. These figures underscore the positive impact of the Bank’s strategies and provide a solid foundation for continued economic stability.
The BoG’s approach represents a departure from traditional exchange rate management practices, which often involve setting fixed targets and intervening heavily to maintain them. By focusing on creating a stable macroeconomic environment and allowing the market to play a greater role in determining the exchange rate, the Bank is promoting a more sustainable and resilient currency. This approach recognizes the limitations of direct intervention and emphasizes the importance of building strong fundamentals to support long-term currency stability. The cedi’s recent performance serves as a compelling example of the effectiveness of this strategy.
In conclusion, the Bank of Ghana’s approach to exchange rate management prioritizes stability and market-driven adjustments over rigid targets. This approach, combined with robust reserves, effective monetary policies, and positive market sentiment, has contributed to the cedi’s significant appreciation. The Bank’s commitment to transparency and its focus on building a strong macroeconomic foundation are essential for maintaining long-term currency stability and fostering sustainable economic growth. The recent performance of the cedi serves as a positive indicator of the effectiveness of these policies and provides optimism for the future of Ghana’s economy.
