Sharp Cedi gains could hurt exports, undermine growth – Prof. Baah-Boateng

Economist and Professor at the University of Ghana, Professor William Baah-Boateng, has expressed concern over the sharp and rapid appreciation of the Ghanaian Cedi, warning that the development, while seemingly positive, could have unintended consequences for key sectors of the economy.

His caution comes in the wake of recent reports highlighting a significant rebound in the Cedi’s value against major international currencies. The interbank rate now stands at GH¢13.29 to the US dollar, a marked improvement from rates above GH¢16 earlier this year.

Speaking on the Citi Breakfast Show on Monday, May 12, 2025, Prof. Baah-Boateng urged a measured response to the currency’s upward trajectory, stressing that swift appreciation may have negative repercussions.

“My concern a bit is that the appreciation is very sharp. And when the appreciation is that sharp, you get a bit worried because you may not know what is down there and have to be cautious,” he stated.

He explained that while a stronger Cedi can help lower the cost of imports, it also makes Ghanaian exports less competitive, potentially discouraging export activity and increasing reliance on imports.

“When there is an appreciation, we are happy, but we may not know what is in the reversal. When you have an appreciation, it encourages import and discourages export. When there is appreciation, and there is import, it reflects on domestic prices.

“On the other side, there will be a problem as exporters will also begin to complain because they are going to get less amount of money when they export. When the exporters see that they are not benefiting when they export, they will leave the export and go on to import.”

Prof. Baah-Boateng further cautioned that increased imports could undercut domestic production, especially if local producers are unable to match the lower prices of imported goods.

“Also, domestic production is going to have a problem because when you have more imports to come and compete with the domestic market. Remember, local prices may not have gone up, so they may be producing using a higher price compared to what is coming into the country.

“So, what is coming in from outside will then come, as it were, to compete with the domestic market, and when that happens, it will undermine our economic growth,” he noted.

Meanwhile, the Ghana Union of Traders’ Association (GUTA) has urged its members to reduce the prices of goods and services in response to the Cedi’s recent appreciation.