Cedi rise due to improved external position, technical factors – Analyst

Economic analyst Emmanuel Boateng has attributed the recent appreciation of the Ghana cedi to significant improvements in the country’s external position and other technical factors.

He noted that the completion of the domestic bond exchange programme, International Monetary Fund (IMF) disbursement, and World Bank budget support played significant roles in the currency’s strength.

In an interview on Business Breakfast on Zed, Mr Boateng explained that the cedi’s performance in the fourth quarter also reflects robust export activity, particularly in goods and oil sectors, alongside partial import compression caused by credit constraints and policy measures. These factors have narrowed the current account deficit and improved the trade balance.

“We have seen meaningful improvement in external position, completion of the domestic bond exchange programme, International Monetary Fund (IMF) disbursement, and World Bank budget support, which have supported our forex capacity. Export performance has also been robust and contributes to the appreciation,” he noted.

The economic analyst  revealed that Bank of Ghana’s active market operations, including recent forex injections, have helped stabilise market volatility and anchor investor expectations amid positive sentiment.

Mr Boateng said the appreciation of the cedi has positively impacted manufacturing, pharmaceuticals, and consumer food sectors by reducing input costs, leading to lower final prices and helping ease inflation pressures in the economy.

The analyst cautioned that the cedi’s appreciation also affects non-financial exports by making them less price-competitive in regional and international markets.

“This could slow efforts to diversify Ghana’s export base, posing risks to long-term economic growth. Real exchange rate appreciation has weakened the market position of import-competing industries, as locally produced goods become relatively more expensive compared to imports,” he explained.

Mr Boateng also called for consistent currency monitoring and stability to support effective economic planning and growth.