Home Business Traders’ Shift from Dollars to Cedis Boosts Local Currency – GUTA

Traders’ Shift from Dollars to Cedis Boosts Local Currency – GUTA

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Ghana Union of Traders Association (GUTA)
Ghana Union of Traders Association (GUTA)

The Ghana Union of Traders’ Associations (GUTA) has linked the cedi’s recent appreciation to declining demand for foreign exchange among businesses, signaling a potential shift in trader confidence toward the local currency.

Charles Kusi Appiah, head of GUTA’s Business and Economic Bureau, noted that many members are now holding cedis rather than dollars as the currency shows unexpected stability.

“Previously, traders accumulated dollars as a hedge, even without immediate need,” Appiah explained. “But with the cedi gaining strength, the incentive to hold depreciating forex has diminished.” He attributed part of this shift to government initiatives like the Gold4Oil program, which has reduced reliance on hard currency for some international transactions by using gold-backed settlements.

The trend reflects changing calculations among importers. Appiah recounted fielding queries from members unsure whether to retain dollar holdings. His advice? “Liquidate if there’s no pressing need alternative stores of value like gold coins now present better options.” Market data appears to support this behavioral change, with reduced forex demand contributing to the cedi’s rally.

While currency fluctuations remain sensitive to external factors, the current pattern suggests businesses are recalibrating their strategies in response to the cedi’s performance. This emerging confidence, if sustained, could mark an important psychological threshold in Ghana’s efforts to stabilize its currency. However, economists caution that lasting stability will require continued fiscal discipline and diversified mechanisms to support the cedi’s value in the long term.

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