Adnan Adams Mohammed
Ghana’s local currency (Cedi) has remarkably appreciated in value against the major international trading currencies over the weeks with Bloomberg rating it as global best-performing currency as at last week.
The Cedi, which experienced significant depreciation to cross GH¢17 to a dollar rate on the retail market in 2023, traded around GH₵13.4 against the dollar last week according to Bank of Ghana data, showing signs of resilience and remarkable recovery.
However, market analysts want both monetary and fiscal authorities to consolidate the recent gains of the Ghana cedi and guard against a potential reversal. They have noted that, the performance is being driven by a mix of improved forex liquidity, but cautioned against any slippage in fiscal discipline.
“Ghana has a history of improved market sentiment following elections and changes in political leadership, particularly reflected in a strengthened exchange rate. However, this trend isn’t new, and the key issue now is how to sustain the momentum”, Macroeconomic Research Manager at GCB Bank PLC, Courage Boti, said in an interview last week.
“The tone at the top is good but we have seen this before, so the question is about what to do to sustain it. We have talked about fiscal discipline, we have talked about bringing inflation down”.
“The responsibility lies with the Finance Minister and the government to back their promises with action by maintaining investor confidence and economic stability by demonstrating real progress in revenue generation and expenditure control without accumulating excessive arrears.”
According to Bloomberg analysis, the Cedi has appreciated 16 percent against the US dollar since the start of April 2025.
Analysts believe the currency’s rally has helped ease inflationary pressures, contributing to Ghana’s lowest inflation rate in eight months.
The Government Statistician, Alhassan Iddrisu, announced in Accra last week that Consumer Price Inflation fell to 21.2 percent in April, down from 22.4% in March. Monthly price increases slowed to 0.8%, driven largely by falling import costs due to the cedi’s strength.
Non-food inflation dropped to 17.9% from 18.7%, while food inflation also eased, declining to 25% from 26.5%.
“A rally in the cedi reduced the cost of imports,” Iddrisu confirmed, crediting the currency’s appreciation with driving much of the recent inflation relief.
Despite this progress, analysts say it’s unlikely that the Bank of Ghana will rush to lower interest rates at its upcoming policy meeting. “It tightened at its last meeting to mop up any excess liquidity,” said Dr. Agyapomaa Gyeke-Dako, an economist and senior lecturer at the University of Ghana Business School. “So now the central bank action going forward may not readily reduce the monetary policy rate yet because there might still be some threats to inflation coming from the hikes in utility prices.”
The Monetary Policy Committee (MPC) had surprised markets in March with a 100 basis-point hike, raising the key rate to 28% as part of efforts to stabilise prices. The central bank has indicated it will continue to assess inflation trends before easing its stance.
“Easier monetary conditions could rekindle inflationary pressures,” warned Mark Bohlund, senior credit analyst at REDD Intelligence, cautioning that the Bank of Ghana may hold off on any near-term rate cuts.
However, there is cautious optimism for rate relief later in the year if disinflation continues. “As the monetary authority sees the next readings of inflation and we see declines, the committee will reassess the scope for a gradual easing in the policy stance,” Governor Johnson Asiama said following the March meeting.
Inflation in Ghana has remained above the central bank’s target band of 6 per cent to 10 per cent since September 2021, following a debt crisis that triggered a sharp depreciation in the cedi and sent import costs soaring. The MPC forecasts inflation could fall to around 16% by the end of 2025, and gradually return to the target range by the second quarter of 2026.
The International Monetary Fund (IMF), which is working closely with Ghana under a support programme, also expressed optimism. “It makes us very confident that inflation is going to go down in the next few months toward the program objectives,” said Stéphane Roudet, IMF Mission Chief to Ghana, during a recent briefing in Washington.
As the West African nation continues efforts to restore economic stability, the resurgence of the cedi has emerged as a bright spot—both a symbol and a tool of recovery.
Meanwhile, the Ghana Union of Traders’ Associations (GUTA) has commended the Bank of Ghana (BoG) for the recent appreciation of the cedi, noting that the local currency’s improved performance has provided much-needed relief to businesses.
In a statement signed by its President, Dr. Joseph Obeng, GUTA acknowledged the steady strengthening of the cedi against major international currencies since the beginning of the year.
The association highlighted that the trend has boosted business confidence and contributed to a more stable economic environment.
“We wish to highly commend the Governor and his team for efficiently managing the forex market to this extent,” the statement said, highlighting the role of the Central Bank’s prudent policies and the government’s fiscal discipline in achieving this stability.”
“Importantly, it has also brought a positive speculation and predictability around the foreign exchange space, thereby eroding the notion that the foreign currency is a store of value in the Ghanaian community”, the statement read.
GUTA attributed the cedi’s resilience to the BoG’s prudent management of the foreign exchange market, coupled with the government’s commitment to fiscal discipline.
According to the traders, these efforts have helped restore stability and predictability for importers and traders, who have long grappled with currency volatility and rising operational costs.
The commendation from GUTA follows a broader sentiment of optimism among private sector players, as the cedi’s recent performance contrasts with periods of sharp depreciation that previously threatened margins and pricing stability.
“These prudent measures, if sustained, would lead to full economic recovery and make businesses competitive”, the release added.
The Member of Parliament for Okaikwei Central Constituency in the Greater Accra Region, Patrick Yaw Boamah, has attributed the development to global economic trends and local fiscal interventions.
In a statement issued last week, the MP pointed out that emerging market currencies have experienced substantial gains against the US dollar over the past two months, with the US dollar index falling by 4.7% in April alone.
Among the currencies that have appreciated against the greenback are the euro, pound sterling, Australian dollar, Chinese yuan, and several others, driven largely by ongoing US-China trade tensions, shifts in US Federal Reserve policy, and growing investor confidence in emerging markets.
“The Ghanaian cedi has gained about 6.82% against the US dollar in April 2025, with the exchange rate dropping from GH¢15.49510 to GH¢14.43811 per a US Dollar as of the end of the month,” Mr. Boamah noted.
He cited multiple factors contributing to the cedi’s strength, including: a weakening US economy amid prolonged tariff disputes, delayed fiscal payments in Ghana which have constrained local spending and an injection of approximately US$1 billion into the economy by the Bank of Ghana, sourced in part from the International Monetary Fund (IMF).
Mr. Boamah expressed optimism that the cedi’s recent performance would support business confidence, planning, and predictability, especially for both local entrepreneurs and international investors.
However, he stressed the need for continued reforms to sustain the gains.
“A lot more has to be done in the area of revenue mobilisation, and strict enforcement of some policies by the central bank,” he stated.
