Strengthen foreign exchange liquidity buffers, others to sustain cedi’s performance – Government urged

The government is urged to strengthen foreign exchange liquidity buffers. It should also diversify reserves and enhance domestic revenue mobilization. These steps are necessary to sustain the Ghana cedi’s performance.

Databank Research emphasizes the need for transparent communication. Continued engagement with multilateral partners is vital for maintaining confidence. This will help limit contagion risks.

In its 2025 Quarterly Report, Databank noted that foreign exchange support and strong reserves provide stability. However, mid-year reparations could put downward pressure on the cedi.

Stephen Miran's proposal to swap short-term U.S. treasuries for ultra-long bonds may destabilize the situation. This could erode investor confidence and lead to capital outflows from emerging markets like Ghana.

Databank recommends strengthening FX liquidity buffers and diversifying reserves. Enhancing domestic revenue mobilization is also crucial. Transparent communication with multilateral partners will help maintain confidence.

Domestically, Databank expects limited external shocks in the near term. Progress on IMF-Economic Credit Facility program benchmarks may lead to additional financing. Disinflation might remain sticky but should accelerate by late 2025 due to supply chain improvements.

The Ghana cedi has been performing well recently. It appreciated against the dollar and other major currencies. The cedi gained 6.25% week-on-week against the dollar in retail markets.

This gain solidifies its position as the best currency among 15 sub-Saharan African currencies. Year-to-date, it has risen 16.29% against the American dollar.