The Ghana cedi continued to depreciate against major trading currencies on Tuesday, September 9, according to the Bank of Ghana (BoG) interbank exchange rates. The cedi was quoted at GHS 12.0440 buying and GHS 12.0560 selling to the US dollar. Against the British pound, it was GHS 16.3148 buying and GHS 16.3323 selling, while the euro traded at GHS 14.1535 buying and GHS 14.1663 selling.
This performance reflects renewed pressure on the local currency. Analysts have, however, cautioned that the exchange rate alone should not be seen as a measure of economic strength.
Speaking on Citi TV on Monday, September 8, Financial Analyst and CEO of Dalex Finance, Mr. Joe Jackson, stressed that while exchange rate stability benefits businesses and investors by making planning and forecasting easier, it does not necessarily reflect the overall health of the economy.
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“The exchange rate is an important thing, but it is definitely not the measure of how well your economy is performing,” he said.
“The Chinese, South Koreans, and Japanese kept their currencies undervalued to boost exports and attract foreign direct investment. A strong currency has its downsides—just ask the Germans, who are currently facing challenges because the euro is too strong.”
Mr. Jackson added that businesses and financial institutions naturally prefer exchange rate stability, but insisted that “stability is still not a measure of economic performance.”
Reviewing the cedi’s trend over the past six months, he explained that the central bank’s interventions had initially held the rate at around GHS 10–11 per dollar. However, once the BoG announced it would no longer intervene, the currency quickly slid to above GHS 12.
In his assessment, the current rate above GHS 12 is more sustainable than the earlier “feel-good” level of GHS 10.5, which he described as an overvalued position that could have created long-term risks.
“In my opinion, the 12-plus rate is a more defensible position for the Central Bank than 10.5. Although 10.5 made everyone bullish, the cedi was over-valued, and that would eventually have brought challenges,” Jackson concluded.
Story By: Afia Ohenewaa Akyerem