The recent appreciation of the Ghanaian cedi against major trading currencies is not the result of artificial support from the Bank of Ghana (BoG), but rather a reflection of robust, non-debt-creating reserves, according to Dr. Zakari Mumuni, First Deputy Governor of the BoG. He emphasized that the central bank has strategically met market demand without depleting its foreign exchange buffers, stating, “If we were that heavy in terms of support to the market, we would not be doing well with reserves.”
Dr. Mumuni highlighted that under the International Monetary Fund (IMF) program, the BoG has achieved significant reserve accumulation. He noted that Ghana’s reserves have surpassed the IMF target of three months of import cover, reaching 3.7 months using the IMF’s metric, and even 4.7 months when including petroleum funds.
Addressing concerns about the nature of these reserves, Dr. Mumuni clarified that they are organically accumulated and not based on debt or short-term inflows. As of the end of April, Ghana’s reserves stood above $10 billion, with expectations to hit $11 billion by the end of June.
The Deputy Governor also pointed to other factors contributing to the cedi’s strength, including the IMF Staff Level Agreement, a decline in inflation from nearly 24% to 21.2%, fiscal consolidation, and aggressive liquidity management by the BoG. He stated, “We’ve sterilised three times the amount we did last year,” indicating a strategic approach to meet forex demand without flooding the market with cedi liquidity.
Dr. Mumuni concluded that the BoG’s balanced and effective approach has resulted in a stronger position for Ghana’s economy, with the cedi’s rally being a credible and sustained outcome of sound economic policies.
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