Vice President Dr. Mahamudu Bawumia has revealed plans to anchor the value of the Cedi to gold in an effort to stabilize the local currency and address persistent foreign exchange challenges. This proposal comes after the success of Ghana’s domestic gold purchase program, through which the Bank of Ghana has acquired 65.4 tons of gold valued at US$5 billion, significantly boosting the country’s gold reserves.
Speaking at the inauguration of the Royal Ghana Gold Refinery in Accra on Thursday, Dr. Bawumia outlined a new foreign exchange policy aimed at ensuring the long-term stability of the Cedi. He suggested that anchoring the Cedi to gold could provide the currency with a stable foundation.
“I would like to propose a new foreign exchange regime management architecture for Ghana next year, in which the value of the Cedi, with everything we have put in place, will be anchored to gold,” Dr. Bawumia stated. “I believe that the best anchor for the Cedi is gold.”
He further explained the framework, suggesting that all significant demand for foreign exchange should be channeled through the Bank of Ghana’s gold purchase program. “If you have GH₵3 billion and you’re looking to buy forex, the Bank of Ghana can take the GH₵3 billion, buy gold, and give you your forex. Demand equals supply, and the exchange rate doesn’t move,” he elaborated.
Dr. Bawumia emphasized that using gold reserves to meet forex demands could maintain long-term exchange rate stability. “Once you can anchor the Cedi with gold, you will be able to meet demand, and there will be extra forex reserves for other national needs, ensuring long-term exchange rate stability anchored on gold,” he added.
According to the Bank of Ghana’s summary of economic and financial data, the Cedi had depreciated by 19.6 per cent against the dollar as of July 2024. Dr. Bawumia’s proposal aims to curb such depreciation by providing a more stable foundation for the Cedi.
