Cedi fluctuations threaten economic stability – Prof. Baah-Boateng

Economics Professor, William Baah-Boateng, has called on the Bank of Ghana (BoG) to make the stability of the cedi a top priority in order to shield the economy from the damaging effects of frequent currency fluctuations.

In an interview, Prof. Baah-Boateng stressed that a stable exchange rate is crucial for effective business planning and economic predictability.

He warned that both sharp appreciation and depreciation of the cedi can harm the broader economy.

“Stability is key. Both appreciation and depreciation can be disruptive. Recently, the cedi moved from GH¢12 to around GH¢10, a swing of nearly 20%. That level of volatility might benefit a few sectors but will hurt the economy overall,” he explained.

He noted that the cedi’s recent appreciation, while seemingly positive, could have negative fiscal consequences especially for government revenue and key export sectors like cocoa.

“When the cedi strengthens too quickly, it reduces the local value of export earnings. Cocoa exporters, including farmers, see their margins shrink. Government revenue also takes a hit,” he said.

Prof. Baah-Boateng urged the BoG to manage the exchange rate more carefully to avoid extreme swings.

“The central bank must ensure the currency doesn’t swing sharply. We shouldn’t see the cedi move fromGH¢S10.5 to GH¢12.5 and then back again. These wide fluctuations create uncertainty,” he cautioned.

His comments echo growing concerns from other economists, including Prof. Godfred Bokpin, who has warned that Ghana’s heavy focus on managing the cedi’s exchange rate risks undermining broader macroeconomic stability.