Currency volatility easing due to Central Bank discipline – Kofi Pianim

The Head of Global Markets at First National Bank, Kofi Pianim, has acknowledged concerns over currency market volatility in Ghana and its impact on businesses, attributing the instability to factors such as foreign investors exiting the domestic bond market.

Speaking on Graphic Business X Dialogue under the theme "2025 Budget: What’s in it for You and Your Business," Mr Pianim noted that while rapid exchange rate fluctuations have made business planning difficult, the situation has improved due to proactive measures taken by the Bank of Ghana.

He credited the central bank for enforcing greater discipline and transparency in the foreign exchange market, ensuring that participants provide real-time information on currency trades.

"So it means that if you're using reserves, you're using more than you need to. The central bank has done a lot of work around discipline, forcing market participants to show where they will create at all times in the day, so that if there's an event, they can react immediately," he stated.

He explained that the Bank of Ghana has adopted a more strategic approach to managing foreign exchange reserves, ensuring that interventions in the market are timely and effective, unlike in the past when reserves were depleted unnecessarily.

Mr Pianim also highlighted external factors supporting currency stability, including financial backing from the World Bank and IMF. He pointed out that restrictions on pension funds investing outside the local market have helped limit capital outflows, further reinforcing the stability of the cedi.

Additionally, he lauded the government's gold-buying programme, which has significantly strengthened foreign exchange reserves.

"The Government of Ghana, or the central bank of Ghana, has also been on our gold-buying programme. Last year, they were around 16 tons, and this year, they're around 30.5 tonnes as of February," he revealed.

Looking ahead, Mr Pianim said that plans to extend the yield curve and open up the debt market to foreign investors could enhance economic stability. He believes that these measures will help Ghana restructure its debt profile and secure cheaper funding opportunities.

However, he stressed that maintaining fiscal discipline and ensuring clear communication with market participants will be crucial in sustaining confidence in the economy.

Despite existing challenges, he remains optimistic that Ghana is well-positioned to navigate currency volatility and attract more foreign investment in the coming years.