Experts have warned that the Bank of Ghana’s (BoG) aggressive foreign exchange interventions to support the cedi in the short-term, will not be sustainable in the medium to long-term.
An economist, Prof. Godfred Bokpin and a Banking consultant, Dr Richmond Atuahene, both said the country’s over-reliance on gold exports and heavy regulatory measures risked undermining the economy’s competitiveness.
Their calls come at a time when the local currency, the cedi, is closing at GH¢12.05 to the dollar, while sliding against the pound and the euro.
Analysts say foreign exchange demand built up faster than expected in the first half of December as businesses prepared for year-end imports.
The tightening conditions reflected a familiar pattern, as the cedi typically came under pressure in the final quarter of the year.
According to Prof. Bokpin, the combination of forex injections, monetary tightening and steep expenditure cuts had helped strengthen the cedi and lower inflation.
“But that same strong cedi has caused dislocations in the economy, affecting government revenue, remittances and the competitiveness of domestic production,” he said.
In an interview with the Graphic Business, Dr Atuahene said the country operated a floating exchange rate system, with the value of the cedi determined by market forces, and commended the BoG for intervening when the cedi weakened.
“It is commendable that the Bank of Ghana invested more in the forex market, especially with gold backing giving additional support,” he said.
The BoG pumped an estimated US$10 billion into the market to support stability from January to November.
Seasonal demand pressures from importers ahead of the festive season, combined with cautious dollar supply, will drive the depreciation.
Currency sales
In the interbank market, the dollar-cedi pair closed at GH¢11.41, up from GH¢11.12 two weeks earlier.
Against the British pound and euro, the cedi lost 4.62 per cent and 3.87 per cent respectively, closing at GH¢15.26 and GH¢13.32.
Retail markets reflected similar trends, with the cedi ending at GH¢12.05 against the dollar, down 0.41 per cent.
Dr Atuahene believes the recent drop in inflation indicates the cedi was being managed well and that the BoG’s intervention has produced results.
“We are performing better than many African economies and are on the right trajectory,” he said.
Market pressure
The retail market saw similar movement, with the cedi closing at GH¢12.05 to the dollar, while sliding against the pound and the euro. Dealers noted that demand built up faster than expected in the first half of December as businesses prepared for year-end imports.
The tightening conditions reflected a familiar pattern, as the cedi typically came under pressure in the final quarter of the year. Traders said expectations of stronger demand in the coming weeks contributed to cautious supply behaviour.
While the central bank continued to inject foreign currency, it maintained a measured pace to avoid draining reserves too quickly. “Our focus remained on meeting genuine demand and smoothing market pressures,” a source at the Bank of Ghana said.
The central bank has injected an estimated US$10 billion into the market since January 2025, marking one of its biggest annual support programmes.
The intervention was largely funded by proceeds from the Domestic Gold Purchase Programme, which benefited from strong global gold prices.
Despite the large inflows into the market, reserves continued to grow. Ghana’s reserves moved from US$9.1 billion in December 2024 to US$11.4 billion in October 2025, with projections above US$12 billion by the end of the year.
In October alone, the Bank of Ghana pumped US$1.15 billion into the market under its foreign exchange Intermediation Programme.
The move supported a 13.9 per cent appreciation of the cedi that month and a 32.2 per cent gain for the year up to October.
Strong cedi
But Prof. Bokpin said an overly strong cedi could deter foreign direct investment and make imports cheaper than local goods, hurting domestic production.
“A strong cedi may not work effectively in our favour because we have a weak productive sector,” he said.
He highlighted potential impact on tourism, noting that foreign visitors might consider Ghana more expensive compared to Kenya or other countries.
He warned that the BoG’s frequent regulatory interventions were tightening the economy too much and could reduce remittance and foreign exchange flows in the long-term.