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Global uncertainties and the Ghanaian cedi: time-frequency and directional information flow analysis

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  • Umar-Farouk Atipaga
  • Maghnitta Mensah

Abstract

This study aims to investigate the impact of global uncertainties on the movement of the Ghanaian cedi. We employed wavelet and Renyi transfer entropy techniques to assess the relationship using daily exchange rates from June 2016 to October 2023. We also did a sub-sample analysis for 2022, which analysts described as a crisis year. We found that the volatility of the Ghanaian cedi is significantly influenced by the oil price volatility and Ghana’s sovereign spread indexes. Our wavelet results showed that risks are muted in the short run but intensify in the medium to long term. The study concludes that debt sustainability is critical for the stability of the Ghanaian cedi. It further found that muted risks accompany investment opportunities at the short end of the horizon.This research is of interest to foreign exchange market practitioners and policymakers in Ghana. It provides insights into the Ghanaian cedi’s level of integration with global developments amid recent shocks and spillovers in financial markets. The findings are crucial for FX traders and policymakers in making informed decisions and developing effective policies.

Suggested Citation

  • Umar-Farouk Atipaga & Maghnitta Mensah, 2025. "Global uncertainties and the Ghanaian cedi: time-frequency and directional information flow analysis," Cogent Economics & Finance, Taylor & Francis Journals, vol. 13(1), pages 2598191-259, December.
    • Handle: RePEc:taf:oaefxx:v:13:y:2025:i:1:p:2598191
    DOI: 10.1080/23322039.2025.2598191
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