President John Dramani Mahama has assured Ghanaians that the recent fluctuations in the value of the cedi are part of a natural adjustment process and not a sign of renewed instability in the economy. He projected that the local currency will eventually stabilise, with any depreciation kept within a modest band of about 5% per year.
Speaking at a media engagement on Wednesday,President Mahama acknowledged both the steep appreciation of the cedi earlier this year and the challenges it created for different sectors of the economy.
“We recognise a very steep appreciation in the value of the cedi in response to the reforms that we are carrying out,” he said. “At one point, people were asking whether it would go below 10, but I explained that while it was undervalued at 16, it was probably overvalued at 10. Somewhere between there lies the real value of the cedi.”
The President admitted that in the first half of 2024, the Bank of Ghana had to intervene aggressively in the foreign exchange market, when the cedi depreciated by nearly 25%. While the intervention helped slow down the decline, the sudden rebound also had unintended consequences.
According to him, the rapid appreciation of the currency triggered an “exponential increase in imports, because people could buy cheaper dollars and import more,” while exporters became unhappy as they earned fewer cedis for their foreign exchange. Mahama stressed the need for balance: “Every country tries to find a point where exporters are able to do good business and importers are not overburdened by high forex rates.”
He also highlighted the impact on remittances from Ghanaians abroad, which dropped sharply as a result of the currency’s swing. “We saw a reduction of 50% in remittances because citizens in the diaspora were taken aback by the rapid appreciation of the cedi. Many adopted a wait-and-see attitude, believing the cedi could not regain its value to that extent and would soon go back up,” he explained.
The President further revealed worrying findings from an investigation into forex transactions. Over the last four years, about $42 billion is estimated to have left the country under the pretext of paying for imports that never arrived. “We started sanctioning some banks and soon we’ll begin interrogating individuals who ostensibly took money out against imports but never brought those imports,” Mahama disclosed.
Looking ahead, he stressed that the government’s target remains to ensure stability. “The cedi is making an adjustment, and I believe it will settle at a certain rate. We will make sure that any depreciation that occurs in the value of the cedi is within a margin of about 5% per annum,” he affirmed.
