Prices to fall as cedi gains weight — BoG governor
Ghanaians can expect to see prices of goods and services begin to fall in the coming weeks as the strengthening cedi works its way through the market, Bank of Ghana Governor Dr Johnson Asiama has said.
At the 124th Monetary Policy Committee press conference in Accra on May 24, Dr Asiama acknowledged that while the local currency has appreciated significantly against the dollar in recent weeks, consumers have yet to feel the relief at checkout counters and market stalls across the country.
The Ghanaian cedi has recorded a remarkable 41.18 per cent year-to-date gain, making it the second-best performing currency globally, narrowly behind the Russian Ruble, which has gained 42.16 per cent. As of 1:30 pm on Monday, May 26, the cedi is trading at 10.43 to the dollar on the spot market, reflecting a 28.7 per cent year-to-date appreciation.
The delay, he explained, stems from businesses still working through inventory purchased when the exchange rate was less favourable.
"You can understand that some people stock their goods at a higher exchange rate, and so naturally, even with the appreciation, it takes a while for you to see that adjustment," Dr Asiama said.
However, he was quick to assure the public that the benefits would materialise, contingent on healthy market competition preventing businesses from artificially maintaining elevated prices.
The governor's comments come as ordinary Ghanaians continue to grapple with high costs of imported goods and services that have persisted despite the cedi's recent gains against major international currencies.
Many consumers have been waiting to see whether currency improvements would translate into tangible relief in their daily expenses, from fuel and food to household items.
Dr Asiama emphasised that competitive market forces would be crucial in ensuring price adjustments occur naturally, warning that monopolistic practices could prevent consumers from benefiting from the improved exchange rate.
“Rest assured that you will see the adjustment certainly, so long as there is competition, so long as it is not a monopoly, and we will see that kind of phenomenon very soon," he stated.
Cedi rebound
Dr Asiama said the cedi has rebounded strongly against the major trading currencies, driven by a combination of factors, including tight monetary policy stance, ongoing fiscal consolidation, record reserve accumulation, strict enforcement of foreign exchange market rules and improved market sentiment.
On how sustainable the appreciation of the cedi is, he said it has to be put into proper context.
“Much as you want to have cedi stability in nominal terms, the important thing here is to ensure that in real terms, the cedi is not appreciating persistently.”
“And so the MPC went into a lot of deliberations, looked at the real movement of the exchange rate, and we think that where we are now, we don’t have that problem of real appreciation that would adversely impact our competitiveness.”
“So, for now, we think that the trend is in line; we are observing it continuously, though. But the appreciation is largely driven by the markets, it is not something that the central bank is using its reserves for,” he explained.
Strong reserves
He said the BoG’s reserve programme was growing, adding that the central bank was not using those reserves to intervene in the market.
“Therefore, the appreciation you are seeing is driven by economic policy stance of the monetary policy,” he said.
External sector
The Governor also indicated that the external sector has continued to improve, with a record provisional current account surplus of US$2.1 billion in the first quarter of 2025, driven mainly by higher prices and increased production volumes of gold and cocoa, and strong remittance inflows.
The current account surplus, together with net outflows in the capital and financial account, resulted in an overall Balance of Payments surplus of US$1.1 billion.
He said the strong external performance resulted in significant reserve accumulation, with Gross International Reserves (GIR) amounting to US$10.7 billion in April 2025, equivalent to 4.7 months of import of goods and services.
“Broadly, the external sector outlook remains favourable, largely anchored on expectations of increased gold and cocoa export receipts, as well as inflows from remittances,” he said.