Cedi confidence hinges on stability, policy discipline – Absa executive director

The Executive Director, Strategy and Operations at Absa Bank Ghana Limited, Adolph Kpegah, has underscored the need for sustained policy consistency and macroeconomic stability to restore public confidence in the cedi and reduce the inclination toward hard foreign currencies.

Speaking at the 11th Absa-UPSA Quarterly Banking Roundtable, Mr Kpegah noted that enduring stability in macroeconomic indicators, combined with predictable policy measures, is vital to reversing the entrenched preference for foreign currency, particularly the US dollar, in local transactions.

He explained that the tendency of some businesses to price goods and services in dollars is a direct reflection of past volatility in the cedi’s value.

“The inclination of some sections of the public to prefer FX to the cedi has partly been influenced by the cedi’s inability to retain value in the past. When a currency fails to hold value, individuals will naturally seek alternatives that better preserve their economic interests,” Mr. Kpegah observed.

According to him, restoring confidence requires a prolonged period of currency stability.

“A sustained period of stability is necessary for confidence in and preference for the cedi or cedi-backed instruments as a store of value,” he said, noting that short-term gains alone are not sufficient to shift entrenched market behaviour.

Mr Kpegah acknowledged recent signs of optimism, such as reports of some real estate developers reverting to cedi pricing following the local currency’s appreciation in the second quarter of 2025.

However, he emphasised that such developments will only translate into lasting behavioural change if underpinned by stability over the medium to long term.

Mr. Kpegah called for a multi-pronged policy approach to achieve this, including avoiding abrupt shifts in monetary and fiscal policy, strictly enforcing foreign exchange regulations to curb illegal pricing in foreign currencies, maintaining prudent fiscal discipline and proactively managing external shocks through strategic planning.

He praised the coordinated efforts between the Bank of Ghana and the Ministry of Finance in stabilising the economy, while stressing that global market conditions and external economic trends remain significant influencing factors.

Mr. Kpegah further emphasised the importance of institutional credibility and policy discipline, warning that without these, confidence-building efforts could quickly unravel.

“The path to restoring confidence in the cedi is neither short nor simple. It demands sustained policy discipline, institutional credibility and a deliberate effort to reshape public sentiment,” he stated.

Highlighting the value of platforms such as the Absa-UPSA Quarterly Banking Roundtable, Mr Kpegah said ongoing dialogue among policymakers, financial institutions and academia is essential for fostering accountability and driving innovation. He particularly commended the organisers for involving students in these discussions, describing such inclusivity as crucial for grooming future leaders capable of navigating Ghana’s complex economic environment.