The Governor of the Bank of Ghana (BoG), Dr Johnson Asiama, has shed light on the key domestic and external factors underpinning recent stability in the exchange rate, outlining their implications for the country’s monetary policy stance.
According to Dr Asiama, current exchange rate developments reflect a combination of strong policy credibility, improved market confidence and robust external buffers. He explained that tight monetary conditions, coupled with enhanced fiscal discipline under the IMF-supported programme, have reinforced investor confidence and provided crucial support for the cedi.
The Governor noted that Ghana’s external position has also been strengthened by elevated reserve buffers. These gains, he said, have been driven by the domestic gold purchase programme, stronger export performance and subdued import demand. Together, these factors have helped to stabilise the currency and reduce vulnerability to external shocks.
In addition, Dr Asiama pointed to anchored inflation expectations and a relatively stable macroeconomic environment as key contributors to the moderation of exchange rate volatility, resulting in more orderly market movements.
“These factors together explain why the cedi has remained resilient,” he said, stressing the need for the Bank of Ghana to maintain close oversight of liquidity and market conditions. While acknowledging that a stronger currency has helped contain imported inflation, he cautioned that sustained vigilance remains necessary to ensure exchange rate trends continue to support broader macroeconomic stability.
Addressing recent market pressures, the Governor explained that current movements in the exchange rate are largely demand-driven and consistent with established seasonal patterns. He noted that market intelligence suggests some degree of front-loaded demand, as economic agents took advantage of relatively favourable exchange rate conditions earlier in the year.
“These pressures are temporary and are being managed in an orderly manner,” Dr Asiama said, adding that they are unlikely to result in significant inflation pass-through risks.
