The First Deputy Governor of the Bank of Ghana (BoG), Dr. Zakari Mumuni, has stated that the recent appreciation of the Ghana cedi is not by chance but the result of deliberate and disciplined policy decisions, especially at the domestic level.
“This is maybe unprecedented,” Dr. Mumuni said on PM Express Business Edition last Thursday.
“If you look at the data from when we started the floating rate regime to now, this is the only time within the first four or five months that we have had this level of strength in the Ghana cedi.”
He revealed that the local currency has appreciated by 12.2% since the beginning of the year.
“Same time last year, we had depreciated by about 13%. So this is a complete reversal of what the situation was,” he noted.
While acknowledging that both domestic and external factors have influenced the cedi’s performance, Dr. Mumuni stressed that the majority of the gains stem from internal policy decisions.
“You will see that the domestic factors really have more weight in this case, in this performance, than the external factors.”
At the core of these gains is a controversial yet deliberate monetary policy stance.
“We raised the policy rate. A lot of people, including GUTA, came after us. They had all kinds of comments. Analysts were not happy about that,” he recalled.
“But we knew exactly what we were doing. And it’s the fruits you are beginning to see,” he added confidently.
The Bank’s decision to tighten monetary policy, he explained, was aimed at one key objective — disinflation.
“We lifted or tightened monetary policy for one reason — to make sure we re-engineer the disinflation process.”
This goal was pursued aggressively through liquidity control.
“We’ve been very, very strong on liquidity sterilisation,” he said. “We are doing this through our open market operations.”
Dr. Mumuni noted that this effort to soak up excess cedi liquidity has had a stabilising effect on the currency.
“This is really helping a lot to take out cedis from the system. And that is actually linked to the policy decision that was made.”
He also pointed to a prior move to adjust banks’ cash reserve ratios.
“This has already sterilised some cedi liquidity in the system. That’s part of what is feeding into this stability.”
He acknowledged the costs of these policies but expressed confidence in their necessity.
“It wasn’t popular. But we stayed focused. And now the numbers speak for themselves.”