Vice Chancellor of the Methodist University, Prof. William Baah-Boateng, has cautioned that premature interventions in Ghana’s currency market could create long-term instability in the exchange rate.
While assessing President John Dramani Mahama’s economic performance, Prof. Baah-Boateng explained that exchange rate movements generally follow predictable cycles within the year.
“When you study exchange movements daily or monthly over a long period, you realise that the exchange rate begins to shake from July, August, and September, or sometimes during the second quarter. This is mainly because we are moving closer to the festive season, and demand is going to go up,” he observed.
He further noted that demand pressures also rise after the first quarter as importers settle bills and multinational firms repatriate profits abroad, but by February, the cedi often stabilises.
Prof. Baah-Boateng, however, expressed concern about the cedi’s unusual appreciation in May this year, describing it as a red flag.
“My worry was that in May, I didn’t see any surge in demand, but we realised that the cedi was appreciating so fast. It only means some intervention might have taken place. I would have thought that when the demand was not so high, we shouldn’t have tampered with it. If we kept what we had and got to August and September, then we could meet the demand, so it would not be a see-saw swing,” he explained.
The economist stressed the need for well-timed policies, warning that artificial interventions risk creating shocks in the market. He urged policymakers to align interventions with seasonal demand patterns to ensure sustainable exchange rate stability.