Adnan Adams Mohammed
A financial analyst has defused assertions by some critics that the Ghanaian local currency, the cedi, is appreciating in value against major international trading currencies simply due to government’s use of the Bank of Ghana’s gold reserves to intervene on the foreign exchange market.
Dr Richmond Atuahene indicated that the Cedi’s performance should be seen as the outcome of a balanced blend of prudent policies and economic activity trends.
In recent weeks, the Cedi has gained strength to be the world’s best performing currency, according to Bloomberg’s analysis, after losing so much value to be the world’s weakest currency just a few years ago. As many Ghanaians are jubilating over this reversal of fortunes, most traders, and some critics of the government are downplaying the current government’s coherent economic policies and fiscal consolidation efforts resulting in the historic performance of the local currency. However, Dr Atuahene justifies his position against such criticism.
“The cedi’s gains are the result of multiple economic forces working together,” Dr. Atuahene noted in an interview last week. “The currency is not strengthened because it is only gold having an impact. Let me tell you on record, remittances have been revamped in this country.”
He explained that “A significant rise in foreign remittances has increased liquidity in the banking sector, improving banks’ access to forex and supporting overall currency stability.”
He also cited surging cocoa prices on the international market as another critical factor.
“Don’t forget cocoa. It will shock you to know that a year ago [in 2024], cocoa was sold at [US$)4,825 per metric tonne. Today, go to the market—we’re talking about [US$) 8,000,” he said.
Beyond remittances and exports, he pointed to macroeconomic policies such as fiscal discipline and tightened monetary policy as important drivers behind the cedi’s resurgence.
“All these things are the factors, in addition to the fiscal discipline, tightened monetary policy, and what have you. So, you can’t lay your hands on just the gold. Let’s get it that remittances are giving lots of banks forex” he added.
Meanwhile, the cedi is projected to continue its upward momentum this week, buoyed by improved market sentiment, Bank of Ghana (BoG) support, and renewed investor confidence, according to Databank Research’s weekly currency update. Last week, the local currency emerged as the top-performing currency among 15 sub-Saharan African countries, continuing its upward trajectory on the back of robust liquidity and stabilizing macroeconomic fundamentals. The Ghana cedi recorded notable appreciation across major currencies: 6.25% against the US dollar (USD), 7.61% against the British pound (GBP), and 5.81% against the euro (EUR).
In a significant endorsement of Ghana’s economic recovery efforts, S&P Global Ratings on May 9, 2025, upgraded Ghana’s long- and short-term foreign currency sovereign credit ratings from Selective Default (SD) to ‘CCC+/C’, while affirming local currency ratings at ‘CCC+/C’ with a stable outlook.
The ratings agency attributed the upgrade to improved economic growth, ongoing fiscal reforms, a stronger external position, and a growing track record of prudent public financial management, particularly through election cycles.
S&P’s decision reflects growing international optimism in Ghana’s economic trajectory, particularly under the stewardship of Finance Minister Dr. Cassiel Ato Forson.
With macroeconomic reforms taking root, foreign exchange conditions improving, and international credit ratings trending upward, analysts anticipate the cedi will maintain its strength in the near term.
“Investor sentiment is improving, and the central bank’s interventions continue to support the local unit,” Databank Research noted. “We expect further appreciation of the cedi in the coming week.”
The rating upgrade is expected to bolster Ghana’s external financing opportunities, reduce debt vulnerabilities, and provide a firmer foundation for long-term currency stability.
On the backdrop of the predicted elevated forecast for the Ghanaian economy, Dr Atuahene is hopeful that Ghana could derive significant benefits if the current appreciation of the cedi against major foreign currencies is maintained over the long term, highlighting the importance of currency stability for the broader economy, particularly in terms of economic planning and business confidence.
“The currency appreciation, if it happens to be long-term, is one of the best things that could happen to us for a very long time. Because we have been in this situation for a very long time. But if we can continue to sustain the stability of the cedi, it will change our situation” he stated.
Dr. Atuahene further noted that sustaining such stability hinges on maintaining key economic fundamentals.
“There are cardinal things—stable exchange rate, lower inflation, lower fiscal deficit, if you get all these components in, then your currency will be as good as anything, and that is good for businesses, import planning,” he said.
