Sustaining local currency stability: Impetus for economic growth

 THE instability of the country’s currency for years has posed a signifi­cant challenge for the managers of the economy, both on the fiscal and monetary fronts.

Like some developing coun­tries, Ghana, is therefore, strug­gling to maintain the strength of its currency, the Cedi, against major international currencies.

The persistent depreciation of the Cedi has had far-reaching effects, including high inflation, rising cost of living, and balloon­ing budget deficits.

As an import-driven economy, Ghana is particularly vulnerable to exchange rate fluctuations. The weakening of the Cedi increases the cost of imports, which in turn raises prices across sectors, affecting both businesses and consumers.

Since independence in 1957, successive governments have grappled with this issue, striv­ing to restore and sustain parity between the Cedi and curren­cies like the US Dollar, British Pound, and Euro—with limited long-term success.

While there have been brief periods of stability, the Cedi has often faltered under global eco­nomic pressures. For example in 2019, prior to the COVID-19 pandemic, the Cedi was ranked among the best-performing currencies in the world.

However, the pandemic, com­pounded by the Russia-Ukraine war, laid bare the currency’s vulnerabilities, resulting in sharp depreciation.

In response, the Bank of Gha­na, under the leadership of Dr Johnson Asiama, has introduced a series of measures to stabilise the currency.

These include a tight mon­etary policy stance to control inflation, enhancing foreign exchange reserves and structural reforms to address exchange rate misalignment.

Encouragingly, these strate­gies have begun to yield results. Since the start of 2025, the Cedi has shown signs of resilience, occasionally appreciating in value against its international trading currencies.

A recent article published in The Ghanaian Times, April 17, 2025, issue, titled “The Signs of a Stable Cedi/Dollar Exchange Rate in 2025,” suggests that the Cedi is likely to remain relatively stable for the remainder of the year.

It said the Cedi is projected to hover around GH¢15.06 and GH¢16.91, with an annual av­erage of GH¢15.90. The article attributes this positive trend to a shift in both fiscal and monetary policies introduced by the new government.

It is our conviction that if the trend is sustained, it will be a welcome relief for both businesses and consumers. Sta­ble exchange rates help control market prices, reduce uncertain­ty, and allow businesses to plan with more confidence. For an import-led economy like Ghana, such stability is vital for main­taining economic balance and promoting growth.

The Ghanaian Times regards these developments as encourag­ing not only for macroeconomic management alone, but also for commercial activity.

Given the country’s reliance on imported raw materials and goods, consistent currency depreciation creates serious ob­stacles for businesses, driving up operational costs and, ultimately consumer prices.

It is, therefore, imperative to support and sustain any effort that contributes to currency stability.

The Ghanaian Times expresses the hope that the strategies out­lined by the new Governor will be both effective and enduring in addressing the Cedi’s long-stand­ing volatility.

While extolling Dr Asiama for his leadership, we also call for complementary measures such as diversifying the economy, boosting exports, and regulating the exchange rate market to elim­inate black-market activities and racketeering.

It is only through such com­prehensive reforms that Ghana can achieve sustainable currency stability and economic indepen­dence worthy of celebration.