Cedi’s Swagger Isn’t from Dollar Steroids – BoG Says It’s All Brains, Not Bills

Editorial Summary: The Bank of Ghana (BOG) is flexing its policy muscles, brushing off claims that the cedi’s newfound calm is due to dollar injections and instead attributing the currency’s stability to tough market reforms and tight monetary discipline. As noted by Accra Street Journal, the central bank insists this is not a lucky streak bought with forex reserves, but a deliberate turnaround fueled by structural fixes and fiscal coordination.

Detailed News: In a marked departure from previous strategies, the Bank of Ghana (BoG) is steering the cedi‘s stability not through the injection of dollar reserves, but through a calculated blend of reforms, macroeconomic strength, and strategic market confidence-building, according to Governor Dr. Johnson Asiama.

Speaking in an interview on sidelines of the IMF/World Bank Spring Meetings in Washington, D.C., Dr. Asiama emphasized that the central bank is not artificially propping up the cedi with foreign reserves.

“The stability that we are witnessing now has nothing to do with the fact that we are selling reserves,” he stated firmly.

Rather, the current exchange rate resilience is rooted in a combination of improved foreign exchange market operations and stronger inflows from key external sources.

Ghana’s cedi has exhibited remarkable resilience in recent months. Since December 2024, the currency has not only stabilized but has even appreciated against the U.S. dollar on several trading days. As of April 2025, BoG figures show that the cedi has gained 2.76% against the greenback. Bloomberg data reinforces this trend, with commercial banks quoting the dollar at between GH¢14.38 and GH¢15.58, a significant signal of renewed confidence in the local currency.

Contrary to speculation that the central bank may be reverting to interventionist tactics reminiscent of fixed-rate regimes, Dr. Asiama made it clear that Ghana remains committed to a market-driven exchange rate.

“Whatever measures we are implementing will not lead to a fixed exchange rate for the Ghana cedi. We believe in allowing market forces to determine the rates, and that is what is going to happen.” He reiterated.

So, what’s driving the cedi’s unexpected strength? According to Dr. Asiama, the gains are underpinned by a trio of supportive factors:

Increased inflows from remittances and stronger export earnings, especially from gold and cocoa, are fortifying Ghana’s external position.

Coordinated fiscal and monetary policy has created a favorable macroeconomic environment, boosting investor and public confidence alike.

A weaker U.S. dollar on global markets has provided emerging market currencies such as the cedi with some breathing room.

“The fiscal side has been supportive of monetary measures, helping to maintain the current development,” he noted, stressing the importance of policy synergy in sustaining the cedi’s progress.

This reform-oriented strategy signals a shift in the central bank’s posture one that leans more on structural adjustments and less on temporary fixes. While skepticism remains about how long the cedi can maintain its upward trajectory without direct market intervention, the BoG appears committed to deepening transparency and fortifying fundamentals rather than deploying reserves as a short-term shield.

In an era where many central banks face pressure to defend their currencies at all costs, Ghana’s approach anchored in restraint, reform, and realism offers a case study in market resilience shaped by strategic policy alignment rather than reactive spending.

Last Updated on May 2, 2025 by samboad