President John Mahama has disclosed that the Bank of Ghana (BoG) has halted its interventions in the foreign exchange market — a decision that, he says, has laid bare both the resilience and vulnerabilities of the cedi.
Addressing journalists at his first media engagement on Wednesday, September 10, the President explained that the move followed several months of sharp appreciation of the local currency.
“And so yes, Bank of Ghana has been intervening in the forex market, but they’ve withdrawn. And what happened was that, because of the rapid appreciation in the value of the cedi, we saw an exponential increase in imports, because then people could buy cheaper dollars, and so they could import more, which is a natural economic phenomenon. But on the other side, exporters are not happy, because they get fewer cedis for what they export.”
Mahama stressed the need for a careful balance between supporting exporters and avoiding excessive costs for importers.
“Every country tries to find out a balance where exporters are able to do good business and importers are not overburdened by high forex rates. Where that lies? I don’t know. I’m not a central bank, but the cedi is making an adjustment, and I believe that it will settle at a certain rate. We will make sure that any depreciation that occurs in the value of the cedi is within a margin of about 5% per annum. That is what we target.”
Reflecting on past fluctuations, he recalled public concern when the cedi fell sharply against the dollar.
“There was one occasion where I said people were asking whether it will go below ¢10, and I said, it is dropping, but it will find its true value. It was undervalued at ¢16, and it probably is overvalued at 10, but somewhere between there we have the real value of the cedi.”
The President noted that volatility makes economic planning difficult, citing the 25% depreciation recorded in the first half of 2024.
He also linked recent challenges to a sharp drop in remittances from abroad.
“It coincided with a period where we saw a reduction of 50% in remittances, because citizens in the diaspora were taken aback by the rapid appreciation of the cedi… most of them would decide to adopt a wait-and-see attitude… So we saw a 50% reduction.”
Mahama further revealed that investigations had uncovered troubling practices in the financial sector.
“Some money transfer companies were collecting dollars abroad and not repatriating them. There were other cases where people applied through commercial banks for foreign exchange to cover imports, and those monies were transferred to pay for imports, but the imports never came into Ghana.”
According to him, the scale of the issue is significant.
“We’ve studied for a period of four years. And every year over the period of four years, about $42 billion was taken out of this country without the corresponding imports coming into the country. And so we started sanctioning some banks, and soon will start interrogating some individuals who ostensibly took money out against imports, but never brought those imports.”
He warned that such abuses undermine the economy and must be addressed.
“We want to know what happened and if there was wrongdoing, to sanction whoever it is. While we work to stabilise our economy and improve the value of our currency, we must protect that currency, because a good, strong cedi is good for all of us. But when that happens, some people try to take advantage of it, and I think that we should all condemn anything like that.”
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