Poorly timed cedi interventions could backfire – Economist warns

Vice Chancellor of Methodist University, Prof. William Baah-Boateng, has cautioned that premature interventions in Ghana’s currency market could lead to long-term instability rather than sustained gains.

In an interview, Prof. Baah-Boateng noted that exchange rate fluctuations in Ghana tend to follow a predictable annual cycle, often influenced by seasonal demand patterns.

“When you analyse daily or monthly exchange rate data over several years, a clear trend emerges.

“The cedi typically comes under pressure between July and September, partly due to rising demand ahead of the festive season,” he explained.

He added that after the first quarter, demand usually picks up as importers settle bills and foreign companies repatriate profits, but stability tends to return by February.

However, Prof. Baah-Boateng expressed concern over the cedi’s unusual appreciation in May 2025, despite no clear signs of rising demand.

“In May, the cedi strengthened unexpectedly, even though market demand didn’t increase significantly. That suggests some form of intervention may have taken place,” he stressed.

“I believe it would have been better to preserve reserves and hold off until demand rises in August or September. That way, we could manage pressure more effectively without creating sharp fluctuations.”

He warned that poorly timed interventions can distort natural market dynamics, leading to more volatility down the line.

Prof. Baah-Boateng called for data-driven, strategically timed currency policies that align with actual market demand, stressing that long-term stability must take precedence over short-term gains.