A policy analyst has questioned the recent strengthening of the cedi, arguing that aggressive interventions by the Bank of Ghana risk masking underlying economic weaknesses.<\/p>\n\n\n\n
George Domfe, president of the Africa Policy Lens, said the central bank\u2019s increased supply of foreign currency had created what he described as an \u201cartificial\u201d appreciation of the local unit.<\/p>\n\n\n\n
\u201cYou are not the one controlling it. You are using somebody\u2019s currency to shore up your local currency,\u201d he said in an interview on Asaase Radio\u2019s The Forum<\/em> programme on Saturday.<\/p>\n\n\n\n Domfe warned that such interventions, if not backed by structural reforms, could expose the economy to renewed volatility.<\/p>\n\n\n\n \u201cIf something happens and you are not able to come to the market to supply more of those currencies, then it means your currency is going to have problems. That means your economy is weak,\u201d he said.<\/p>\n\n\n\n The cedi has strengthened sharply in recent months, moving from around 14.9 per dollar to about 10.3 following what Domfe described as sustained foreign exchange injections after the new central bank leadership took office.<\/p>\n\n\n\n He argued that while central bank intervention is not unusual, the scale of recent actions was higher than normal.<\/p>\n\n\n\n \u201cWhen you use aggressive interventions to shore up your currency, you have not built a resilient economy,\u201d he said.<\/p>\n\n\n\n Domfe said long-term currency stability depends on reducing import demand and boosting domestic production, including in sectors such as agriculture and manufacturing.<\/p>\n\n\n\n \u201cIf people are demanding dollars, what do they use the dollar for?\u201d he asked. \u201cIf government begins to produce what we import\u2026 demand for dollars goes down and the cedi naturally becomes stronger.\u201d<\/p>\n\n\n\n He also pointed to strong global gold prices as a key factor supporting Ghana\u2019s foreign reserves, warning that any downturn could reverse current gains.<\/p>\n\n\n\n \u201cToday gold is doing so well\u2026 If gold comes down\u2026 the inflows that are boosting reserves will reduce,\u201d he said, adding that sustained dollar supply at current levels may not be feasible.<\/p>\n\n\n\n Domfe further challenged claims by President John Dramani Mahama that the economy is resilient, citing unemployment pressures.<\/p>\n\n\n\n \u201cAn economy that people don\u2019t have jobs\u2026 over 500,000 are running around to join the security services\u2026 tells you how weak the economy is,\u201d he said.<\/p>\n\n\n\n source:asaaseradio<\/p>\n","protected":false},"excerpt":{"rendered":" A policy analyst has questioned the recent strengthening of the cedi, arguing that aggressive interventions by the Bank of Ghana risk masking underlying economic weaknesses. George Domfe, president of the Africa Policy Lens, said the central bank\u2019s increased supply of foreign currency had created what he described as an \u201cartificial\u201d appreciation of the local unit. […]<\/p>\n","protected":false},"author":8,"featured_media":49028,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_post_source_name":"","_post_source_url":"","footnotes":""},"categories":[61,43,1],"tags":[1648,147,7358,10957,5059,3977,11337,5195,9309,13030,13031,5196,192,5918,2264,12138,11493,7407,1031,9974,130,10742,3805,10390,11495,7540,5807,5655,1383,8840,7746],"class_list":["post-49027","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-local-news","category-news","tag-africa","tag-agriculture","tag-bank","tag-bog","tag-cedi","tag-central-bank","tag-demand","tag-dollar","tag-dollars","tag-dr-george-domfe","tag-economic-resilience","tag-economy","tag-ghana","tag-gold","tag-government","tag-import","tag-interview","tag-jobs","tag-john-dramani-mahama","tag-leadership","tag-mahama","tag-market","tag-president","tag-prices","tag-reforms","tag-reserves","tag-risk","tag-security","tag-security-services","tag-strong","tag-unemployment"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/posts\/49027","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/comments?post=49027"}],"version-history":[{"count":2,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/posts\/49027\/revisions"}],"predecessor-version":[{"id":49030,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/posts\/49027\/revisions\/49030"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/media\/49028"}],"wp:attachment":[{"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/media?parent=49027"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/categories?post=49027"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nsemgh.com\/api-json\/wp\/v2\/tags?post=49027"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}