Economist Professor Patrick Asuming has cautioned that the recent sharp appreciation of the Ghanaian cedi could introduce market volatility, advocating instead for a more measured and steady rise in the currency’s value.
Speaking on Channel One TV’s The Big Issue on Saturday, May 17, Prof. Asuming acknowledged that currency appreciation is typically seen as positive. However, he warned that the rapid pace of the cedi’s recent gains mirrors the same risks associated with swift depreciation.
“I will largely agree that the appreciation perhaps has gone a little too far, but even more importantly, I think that making the currency appreciate so quickly or so sharply over a short period, I am not sure, is a clever thing to do,” he said.
He noted that such abrupt movements can foster uncertainty in the market.
“When the currency depreciates so quickly and appreciates so sharply in a short period, you see the concerns that come with uncertainty. In some sense, it is the same thing that is happening,” he explained.
Prof. Asuming also questioned the rationale behind the apparent government intervention that may have triggered the appreciation, arguing that the cedi had not been under any significant pressure.
“It is not like we were in a period where the cedi was under pressure for which we needed to pump dollars to support it,” he pointed out.
He argued that a more gradual appreciation would have allowed Ghana to accumulate stronger foreign reserves, which are crucial to cushion the economy against potential future shocks.
“So I would have preferred that even if the cedi was to appreciate, it should have been slow and steady—and definitely not to this extent—so that we get hold of more reserves because when things turn around for the advanced countries’ economies, some level of pressure will come on the cedi,” he concluded.
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