Analyst credits cedi recovery to bold policy moves
By: Rebecca Okine
Financial analyst Sylvester Asare has attributed the recent recovery of the Ghanaian cedi to a combination of strategic and deliberate policy measures implemented over the years to stabilize the currency.
Speaking on Zed FM’s current affairs programme, The FOCUS, Mr. Asare said the measures were not only timely but also necessary to preserve the relevance of the cedi as a medium of exchange. He highlighted the currency redenomination exercise introduced in 2007 as a key turning point in making the cedi more functional and efficient.
“We took off the zeros to make the cedi more portable,” he said. “Money must serve as a medium of exchange and a store of value, and that can’t happen if people are forced to carry bags of cash for everyday transactions.”
Mr. Asare further explained that high inflation in previous years had undermined confidence in the local currency, causing excessive demand for foreign exchange, particularly the U.S. dollar. However, targeted monetary policies, including the issuance of long-term bonds, reversed the trend.
“At a time when T-bill rates were about 24%, the government introduced a four-year bond at 42%,” he recalled. “That incentive encouraged people to invest in the cedi rather than chase dollars, which helped the currency appreciate.”
Despite the progress, he warned that the sustainability of the cedi’s recovery hinges on prudent management of public funds. “If proceeds from bonds are used for short-term expenditures like school feeding, the repayment becomes a challenge. Investments must be productive to generate returns.”
Mr. Asare concluded that while recent gains are encouraging, consistent policy discipline is essential to maintain macroeconomic stability and long-term currency resilience.
