Marginal Cedi Depreciation Now Not a Risk to Stability – BoG

Introduction

The Bank of Ghana (BoG) has reassured the public that the recent marginal depreciation of the Ghanaian cedi does not threaten the country’s macroeconomic stability. This statement comes amid concerns following a 4.0% loss in the cedi’s value against the US dollar during January 2026. In this article, we will explore the BoG’s stance, the underlying economic fundamentals, and what this means for Ghana’s financial outlook.

Key Points

Background

The Cedi’s Recent Performance

The Ghanaian cedi has experienced fluctuations in value against major international currencies, particularly the US dollar. In January 2026, the cedi lost 4.0% of its value, sparking concerns among investors and the general public about potential inflationary pressures and economic instability.

Bank of Ghana’s Role

The Bank of Ghana serves as the country’s central bank, responsible for maintaining price stability, managing the currency, and implementing monetary policy. The BoG’s Monetary Policy Committee (MPC) meets regularly to assess economic conditions and adjust policy as needed.

Analysis

BoG’s Reassurance

Governor Dr. Johnson Asiama has emphasized that the recent depreciation is not a cause for alarm. He stated, “The four percent depreciation of the cedi in January [2026] is not a worry.” This reassurance is based on the BoG’s assessment that the underlying economic fundamentals remain strong.

Economic Fundamentals

The BoG’s confidence stems from several factors:

1. **Robust Economic Indicators**: Key economic indicators such as GDP growth, inflation rates, and foreign exchange reserves are within acceptable ranges.
2. **Policy Framework**: The BoG’s monetary policy framework is designed to manage short-term fluctuations and maintain long-term stability.
3. **Liquidity Management**: The central bank continues to use open market operations to manage liquidity and support orderly market functioning.

Market Expectations

The BoG’s statement aims to anchor market expectations and prevent panic-driven currency movements. By communicating its stance clearly, the central bank seeks to maintain confidence in the cedi and the broader economy.

Practical Advice

For Businesses and Investors

1. **Stay Informed**: Keep up-to-date with official statements from the BoG and other economic indicators.
2. **Diversify**: Consider diversifying investments to mitigate currency risk.
3. **Plan for Volatility**: Build flexibility into financial planning to accommodate short-term currency fluctuations.

For the General Public

1. **Avoid Panic**: Trust in the BoG’s ability to manage the economy and avoid making hasty financial decisions based on short-term currency movements.
2. **Budget Wisely**: Maintain a budget that accounts for potential price changes due to currency fluctuations.
3. **Save in Local Currency**: Continue to save and transact in the local currency unless there’s a specific need for foreign currency.

FAQ

Conclusion

The Bank of Ghana’s reassurance regarding the recent marginal depreciation of the cedi reflects confidence in the country’s economic fundamentals and the effectiveness of its monetary policy framework. While short-term currency fluctuations are normal, the BoG’s proactive stance and commitment to stability provide a solid foundation for economic resilience. Businesses, investors, and the general public should stay informed, plan wisely, and trust in the central bank’s ability to navigate challenges.