One of the least intellectually defensible arguments is the tendency to ridicule experts for describing “THE CURRENT STABILITY OF THE CEDI AS ARTIFICIAL WHILE ALSO INDICATING THAT AKUFO-ADDO’S ADMINISTRATION HAS A HAND IN IT”. Supporters of the government must understand that individual ignorance does not imply universal ignorance. Economic phenomena are often more complex than political rhetoric suggests.
To begin with, the Bank of Ghana (BoG) intensified its foreign exchange interventions in April 2025, when the US dollar was trading at approximately GH¢14.90. These aggressive interventions were facilitated, in part, by the foreign exchange reserves accumulated before the change of government. Ghana reportedly had reserves of approximately US$9 billion at the end of the Akufo-Addo administration. Without sufficient reserves, the BoG would have faced significant constraints in financing interventions on that scale. THIS IS NOT AN ENDORSEMENT OF THE AGGRESSIVE INTERVENTIONS; RATHER, IT IS AN ACKNOWLEDGEMENT OF THE ECONOMIC CONDITIONS THAT MADE THEM POSSIBLE.
Foreign exchange market interventions by central banks are neither unusual nor inherently problematic. Central banks routinely intervene in the foreign exchange market to moderate excessive volatility and maintain orderly market conditions. Our principal concern has never been the mere existence of such interventions, but their magnitude, sustainability, and potential consequences for the broader economy. Injecting approximately US$1 billion monthly into the secondary foreign exchange market is an exceptionally aggressive strategy. Beyond concerns about its sustainability, excessive reliance on such interventions risks diverting policy attention from the structural reforms required to strengthen domestic production and export competitiveness. We must not mistake the temporary management of symptoms for the permanent resolution of underlying economic problems.
The concept of artificial currency stability requires careful explanation. When a domestic currency appreciates or maintains its value primarily because of sustained central bank interventions, rather than improvements in the economy’s underlying productive capacity and foreign exchange-generating potential, such stability may be considered intervention-dependent and potentially unsustainable. This does not mean that every central bank intervention is artificial or undesirable. The critical question is whether the stability can be maintained without continued, substantial injections of foreign exchange.
The BoG’s capacity to sustain its interventions was also influenced by developments beyond its direct control. First, the substantial increase in international gold prices in 2025 improved Ghana’s potential to generate foreign exchange from gold exports. These additional inflows helped ease foreign exchange pressures. Second, Ghana’s external debt restructuring reduced immediate debt-servicing pressures, creating some fiscal and external-sector relief. THIS IS ANOTHER REASON THE ECONOMIC LEGACY OF THE AKUFO-ADDO ADMINISTRATION REMAINS RELEVANT TO AN ASSESSMENT OF CURRENT CURRENCY STABILITY. The restructuring provided temporary breathing space that helped ease external financing constraints.
However, debt restructuring does not eliminate a country’s external debt obligations; it generally changes their timing and terms. As the relief associated with the restructuring diminishes and external debt-service obligations increase, the BoG may find it increasingly difficult to sustain interventions at the current scale, particularly if foreign exchange inflows weaken. The anticipated return of substantial external debt-service obligations from 2027 therefore raises legitimate questions about the long-term viability of the present intervention strategy. The precise timing and magnitude of these pressures, however, depend on Ghana’s revised debt-service schedule and future foreign exchange earnings.
The fundamental issue is that currency stability cannot sustainably depend on the central bank’s ability to supply dollars INDEFINITELY. A more durable solution requires expanding domestic production, reducing avoidable import dependence, and strengthening export capacity. When an economy produces more of the goods and services it consumes, it reduces its demand for foreign exchange. When it also exports competitively, it generates the foreign exchange needed to finance essential imports and meet external obligations. This creates a stronger foundation for currency stability than persistent reliance on central bank interventions.
Ghana has experienced episodes of currency stability supported by favourable external conditions and policy interventions before. Consequently, the present appreciation of the cedi should not automatically be interpreted as evidence that the structural challenges facing the economy have been resolved. The relevant test is whether the currency can withstand renewed external shocks, increased debt-servicing obligations, and changes in global commodity prices without experiencing severe depreciation. If conditions similar to those that precipitated the 2022 currency crisis were to recur, the cedi could come under substantial pressure again. The extent of that pressure would depend on the strength of the country’s reserves, export earnings, fiscal position, and policy response at the time.
The BoG’s initiative to facilitate direct trade with China using the cedi is therefore a potentially important development. By reducing the need to convert the cedi into a third currency for eligible transactions, such arrangements could help reduce transaction costs and some demand for US dollars. However, the overall benefits will depend on the settlement mechanism, the balance of trade between the two countries, and the extent to which the arrangement genuinely reduces Ghana’s net foreign exchange requirements.
Similarly, the GoldBod’s role in the gold value chain and its foreign exchange intermediation activities could contribute to improving foreign exchange supply. Nevertheless, the effectiveness of this approach must be assessed against its operational costs, the net foreign exchange it generates, its implications for the BoG’s balance sheet, and the sustainability of its financing arrangements. These initiatives should complement, rather than substitute for, broader structural reforms.
In conclusion, Ghana must move beyond an excessive preoccupation with short-term currency appreciation and concentrate on the fundamentals that determine long-term exchange rate stability. The agricultural and manufacturing sectors must be at the centre of this strategy. Expanding agricultural production, strengthening agro-processing, supporting local manufacturers, improving productivity, and promoting competitive exports would reduce import dependence while increasing the economy’s capacity to generate foreign exchange.
Ultimately, the most sustainable currency stability is one supported by strong domestic production, diversified exports, adequate foreign exchange earnings, and sound macroeconomic management—not one that depends disproportionately on the central bank injecting enormous amounts of dollars into the market every month. That is the structural transformation Ghana must pursue if it is to achieve lasting exchange rate stability.