Dollarisation and Exchange Rate Uncertainty Fuel Inflationary Pressures – Nicholas Gbana
Development Economist and Chartered Accountant, Nicholas Issaka Gbana, has identified rising dollarisation and shortened quotation validity periods as two major channels through which exchange rate instability feeds into inflationary pressures in Ghana.
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 noted that persistent volatility in the cedi continues to shape pricing behaviour across key sectors of the economy.
“Typically, we see the effects in two key areas – dollarisation and pro forma invoices,” he said, pointing to widespread pricing in foreign currencies particularly in the hospitality, housing and automobile sectors. According to him, hotels, real estate developers and vehicle dealers increasingly quote prices in US dollars or other foreign currencies such as the Japanese yen, with some landlords even demanding rent in dollars.
The second impact, he explained, relates to business quotations and pro forma invoices. “Standard practice is that there’s always a validity period because suppliers don’t know how the exchange rate is going to go,” he said, adding that uncertainty over currency movements often leads suppliers to shorten validity periods or pad prices with extra margins to hedge against potential depreciation.
Mr. Gbana noted that this behaviour is especially pronounced in government procurement processes, where long approval timelines expose suppliers to exchange rate risks. “If a supplier is not too sure of the price of the currency, they add an extra margin just to compensate for an anticipated increase in prices,” he said.
He warned that these practices ultimately worsen inflation, as businesses price goods above prevailing exchange rates in anticipation of further depreciation. “If the exchange rate is 15 and people expect it to go to 17, they will price at 17 ahead of time,” he explained.
On proposals to ban dollar pricing, Mr. Gbana dismissed such measures as ineffective, stressing that existing Bank of Ghana regulations already prohibit pricing in foreign currency. “The law prohibits you to even price in forex, and yet it has continued. So a ban is not the way to go—it simply doesn’t work,” he said.
Instead, he argued that restoring confidence through credible fiscal and monetary policy is key. “It’s about confidence. If the confidence is not there, no amount of ban would work,” Mr. Gbana stated, emphasising that business expectations are largely shaped by the actions of the Ministry of Finance and the Bank of Ghana, as well as external factors beyond domestic control.
