BoG Governor Dismisses Cedi Appreciation Target, Highlights Market Confidence and Adequate Reserves
Governor of the Bank of Ghana (BoG), Dr Johnson Asiama, has refuted suggestions that the Central Bank has set a specific target rate for the appreciation of the cedi, stating that the Bank’s exchange rate management remains focused on curbing excessive volatility rather than enforcing fixed thresholds.
Speaking at a press briefing following the Monetary Policy Committee (MPC) meeting to assess the macroeconomic landscape, Dr Asiama stressed that the BoG does not maintain any formal policy to ease the local currency’s appreciation once it reaches a certain level.
“We don’t have such a plan on the table that says when the cedi reaches a certain point, we must move to ease the appreciation,” the Governor asserted. “As much as we don’t want to see the Ghana cedi depreciate excessively, we don’t keep a target rate that we want to defend aggressively.”
Addressing ongoing market rumours, he added: “People are out there with all sorts of speculations, but remember you haven’t heard the Bank of Ghana playing in that space. We will ensure that volatilities do not become excessive.”
He reiterated the Bank’s focus on broader exchange rate dynamics, particularly the real effective exchange rate, noting that while short-term fluctuations are inevitable, BoG’s objective remains anchored in preventing disruptive swings.
Cedi Gains Supported by Fundamentals
Dr Asiama also responded to concerns that the cedi’s recent gains may be artificially supported by reserve depletion, clarifying that current trends are backed by fundamentals.
“What we are witnessing with the Ghana cedi is influenced by strong reserves, robust monetary policy measures, and favourable market sentiments based on actions taken on both the monetary and fiscal fronts,” he explained.
According to data released by the Central Bank on May 22, 2025, the cedi has appreciated by 24.1% year-to-date against the US dollar, supported by international reserves of $10.6 billion at end-April — equivalent to approximately 4.7 months of import cover.
Dr Asiama attributed much of the cedi’s strength to improved investor confidence, stating, “We believe that market sentiments are now playing a significant role in the cedi’s sustained appreciation.”
On the lag in price responses to the stronger currency, the Governor urged for patience, highlighting competition dynamics among traders as a potential factor for future price adjustments. “It’s just a matter of time. We also believe that competition may play a significant role in the coming weeks, forcing traders to respond to current market developments,” he said.
Inflation Outlook and Monetary Policy Direction
Turning attention to inflation, Dr Asiama reaffirmed the Central Bank’s commitment to its 2025 end-year target of 12%, adding that Ghana could return to single-digit inflation by the first quarter of 2026.
“I don’t think the end-of-year target is ambitious, looking at the policy measures we have undertaken,” he said confidently. “We should be able to manage any external developments that could reverse the current disinflation trend.”
The Bank of Ghana, at the latest MPC meeting, opted to maintain the policy rate at 28%, indicating a cautious but steady monetary stance amidst moderating inflation.
Cash Reserve Ratio Reform and Credit Growth
A key policy update from the meeting was a revision in the Cash Reserve Ratio (CRR) framework. Dr Asiama announced that all banks are now required to maintain their reserves in the respective currencies of their deposits — foreign currency reserves for foreign deposits and domestic currency reserves for local deposits.
The BoG also observed an encouraging trend in private sector credit, buoyed by a steady decline in the Ghana Reference Rate.
“When you look at the Ghana Reference Rate, it has been dropping. We will continue with current measures to sustain this decline,” the Governor noted, with some industry analysts projecting a likely increase in credit to the private sector over the coming months.
International Reserve Position Remains Strong
Commenting on the adequacy of Ghana’s reserves, Dr Asiama stressed that the current level of $10.6 billion is sufficient to meet external obligations and maintain stability.
“There is no upper limit target for now, but we do have what you can call a lower limit of three months of import cover,” he said. “What we have now is adequate and ensures our external resilience.”
He further assured stakeholders that the Bank’s reserve management strategy is fully aligned with programmed external payments. “We have everything programmed. What we have now is pretty adequate,” he concluded.
The Bank of Ghana’s next policy meeting is expected to continue its watchful approach as it navigates the path of currency stability, inflation control, and support for economic recovery.
