The Ghanaian cedi, which began 2025 with a dramatic rally against major international currencies, has seen its year-to-date gains sharply trimmed.
According to the latest report by Databank Research, the cedi’s performance cooled considerably in June, paring its impressive 41.78% appreciation at end-May to a more modest 21.76% by the close of June 2025.
Last week alone, the cedi shed 0.10% against the US dollar in the interbank market, settling at a midrate of GH¢10.31 after trading within a tight range. In the retail market, losses were more pronounced as the currency fell by 1.57% to sell at GH¢12.75 to the dollar.
The cedi also depreciated by 2.06% each against the British pound and the euro, closing the week at GH¢17.00 and GH¢14.60, respectively.
Despite the weakening, analysts at Databank maintain that the local currency still has strong prospects in the near term, driven by significant external financing and easing global dollar pressures.
World Bank and IMF Cash Infusions Provide a Buffer
Supporting the positive outlook is a raft of new financial inflows designed to stabilise Ghana’s macroeconomic environment. The World Bank recently approved $360 million under the Development Policy Operation (DPO2), a programme intended to help the country rebuild fiscal buffers and sustain reforms.
Databank Research also cited expectations of a $370 million disbursement from the International Monetary Fund’s Extended Credit Facility (IMF ECF). Together, these inflows are anticipated to bolster the Bank of Ghana’s reserves and provide critical support to the cedi’s exchange rate in the weeks ahead.
“We maintain a positive outlook for the USD/GHS pair in the coming week as the dollar continues to struggle to reclaim the critical 97.70 level on the Dollar Index,” Databank Research noted. “With expectations of the US$370 million IMF disbursement strengthening alongside the recent World Bank approval, we expect sentiment to remain measured.”
Dollar Index Pressures Offer a Silver Lining
While domestic factors have weighed on the cedi’s momentum, global developments have helped cushion the impact. The US dollar itself has been under pressure, failing to decisively retake the 97.70 threshold on the Dollar Index, a widely followed measure of the greenback’s strength against major peers.
This weakness has offered a degree of relief to emerging market currencies, including the cedi. According to market analysts, so long as the dollar index remains subdued, the cedi could benefit from relatively supportive external conditions.
However, the resilience of this trend will depend significantly on US monetary policy in the second half of the year.
All Eyes on the US Federal Reserve
Market attention is now squarely focused on the US Federal Reserve’s upcoming policy meeting slated for late July 2025. Investors and currency traders are closely watching for any hints that the Fed could shift from holding interest rates steady to potentially cutting them later this year.
A rate cut by the Federal Reserve could weaken the US dollar further, indirectly supporting the cedi and other emerging market currencies. Conversely, any signals of prolonged tight monetary policy could renew dollar strength and put the Ghana cedi back under pressure.
“The Federal Reserve’s late-July meeting will be pivotal to the cedi’s resilience,” Databank Research cautioned. “Policy signals that steer dollar momentum will be crucial in determining whether the cedi holds its ground or faces renewed depreciation.”
Measured Optimism Among Traders and Analysts
Despite recent declines, the cedi’s year-to-date performance remains one of the strongest in Africa, even after its gains were effectively halved in June. Analysts believe that the combination of multilateral funding and improved fiscal management gives Ghana an opportunity to sustain stability through the second half of 2025.
Traders, however, remain cautious, noting that the recent volatility underscores the cedi’s vulnerability to both domestic policy execution and external shocks.
At the start of this week, the cedi was quoted at GH¢12.70 in the retail market and GH¢10.35 on the interbank market, reflecting some tentative recovery from last week’s lows.
While June marked a clear deceleration in the cedi’s rally, the overall sentiment among analysts remains one of measured optimism. The infusion of World Bank and IMF funds, combined with softer dollar dynamics, is expected to offer some stability in the short term.
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