Sharp Currency Swings, not Direction, Pose Biggest Risk to Cedi Stability – Nicholas Gbana
Development Economist and Chartered Accountant, Nicholas Issaka Gbana, has cautioned that sharp swings in the value of the Ghana cedi—whether depreciation or appreciation—pose a greater threat to economic stability than gradual currency movements, stressing that volatility, rather than direction, is the real concern for businesses.
Speaking during the NorvanReports and Economic Governance Platform (EGP) X Space themed “Cedi Stability in 2026: Can Ghana Hold the Line After the IMF?” on Sunday, February 8, 2026, Mr. Gbana said the cedi is not expected to remain fixed but must adjust in a predictable and gradual manner.
“The Ghana cedi is not that it will not appreciate or it will not depreciate, but it is the sharp depreciation and sharp appreciation that create a problem,” he stated, explaining that sudden movements deny businesses the time needed to adjust to changing costs and revenues.
According to him, gradual currency movements provide breathing space for firms to respond to shifts in exchange rates, unlike abrupt changes that can instantly alter debt positions, pricing structures and profitability. While exporters often welcome sharp depreciations, Mr. Gbana noted that sudden appreciations can be equally disruptive.
“Sharp appreciation is also not good for exporters,” he said, illustrating that a rapid strengthening of the cedi could significantly erode export revenues within a short period. “That is almost a 20 percent drop in your revenue in the space of a month. That is disruptive for any business,” he added.
Beyond domestic factors, Mr. Gbana highlighted external shocks as the most significant risk to cedi stability in 2026. On the export side, he pointed to gold prices, while stressing that oil prices remain a key vulnerability on the import side. He explained that geopolitical tensions, particularly in the Middle East, could quickly push up oil prices and freight costs, with spillover effects on inflation and the exchange rate.
“If there is some kind of fighting that starts immediately, oil prices would rise, freight rates would go up, and all these would feed into prices,” he warned.
Mr. Gbana expressed confidence that fiscal indiscipline is unlikely to be a major risk in 2026, given tighter controls and the absence of central bank financing of government deficits. Instead, he emphasised the importance of maintaining adequate international reserves to cushion the economy against short-lived external shocks.
He noted that while Ghana currently has relatively strong reserves to manage temporary disruptions, the country remains vulnerable to prolonged global crises similar to the COVID-19 pandemic. “As it stands now, we have fairly good reserves to manage shocks that are short-lived,” he said, adding that a major, extended external crisis would stretch existing buffers.
Mr. Gbana concluded that sustaining cedi stability will largely depend on prudent reserve management and favourable external conditions, urging policymakers to remain vigilant in a global environment largely beyond Ghana’s control.
