FX Volatility Reflects Structural Weaknesses, Not an Anomaly – Analyst
By: Solomon Nartey Tetteh
Economic Analyst Emmanuel Boateng has attributed recent volatility in the foreign exchange (FX) market to deep-seated structural challenges within Ghana’s economy, warning that without comprehensive reforms, the country will continue to experience sharp currency swings.
Mr. Boateng made the remarks on Business Breakfast on Zed, against the backdrop of Bank of Ghana (BoG) data showing that Ghana’s public debt has climbed to about GH¢684.6 billion.
He explained that the central bank’s recent shift to a more cautious policy stance, reducing direct market interventions in favour of an intermediation approach has contributed to slower short-term currency stabilisation. According to him, the strategy was largely aimed at preserving Ghana’s gross international reserves, currently estimated at around US$11 billion.
He noted that while periods of cedi appreciation often generate optimism, they are frequently followed by sharp depreciation, underscoring unresolved underlying issues within the economy.
“We all celebrate when we see appreciation, but when depreciation sets in, we are reminded of the same challenges. There are fundamental issues we must address,” he stated.
The analyst identified weak trade balances, limited diversification of exports, speculative trading activities and excessive import dependence as key drivers of currency instability. He observed that these factors have, at times, caused the cedi to swing dramatically from being among the best-performing currencies to one of the worst within a short period.
According to Mr. Boateng, developments over the course of the year clearly signal the urgent need for a more diversified inflow of foreign exchange and deeper reforms within the FX market.
“This year’s performance is an indication that we need diversification and deeper market reforms to build resilience against these unexpected, unpredictable and in some cases predictable but very powerful forces,” he stressed.
He cautioned that failure to implement such reforms would leave Ghana trapped in a recurring cycle of currency appreciation and depreciation, with adverse implications for economic stability, inflation and investor confidence. Mr. Boateng urged policymakers to prioritise export diversification, strengthen market depth and address speculative pressures to ensure a more stable and resilient currency environment.
