The Bank of Ghana has moved to calm nerves in the foreign exchange market after fresh data showed the cedi retreating against major international currencies at the start of 2026.
The pullback comes after the local currency recorded one of its strongest performances in recent history in 2025, prompting concerns among businesses and investors about whether the gains can be sustained.
Governor of the Bank of Ghana, Dr Johnson Pandit Asiama, has stressed that the recent movements do not signal fundamental weakness. According to him, short-term depreciation is a normal feature of Ghana’s exchange rate framework and should not be misinterpreted as policy failure.
“What we have is a managed floating system, what that means that you allow the exchange rate to adjust to shocks, it is part of the process. The Cedi may move up, but then it must move down. Our objective is to ensure that the volatilities are not excessive, and so don’t get worried if you see the Cedi moving a little bit; it is normal.”
Dr Johnson Pandit Asiama
January Data Shows Cedi Under Pressure
Fresh figures from the Bank of Ghana’s Economic and Financial Data for January 2026 indicate that the cedi lost ground on the interbank market during the month. The local currency traded at GH¢10.88 to the US dollar in January 2026, compared with GH¢10.45 at the end of December 2025, representing a depreciation of about 4 per cent.
The weakness extended beyond the dollar. The cedi depreciated by 4.9 per cent against the British pound and 4.1 per cent against the euro. During the period under review, it traded at GH¢14.77 to the pound and GH¢12.80 to the euro on the interbank market.
Across segments of the foreign exchange market, performance remained mixed. In the retail market, the cedi exchanged at about GH¢12.00 to the dollar, reflecting lingering demand pressures. The dollar traded within a narrow band, slipping modestly from GH¢11.90 to GH¢12.15. Meanwhile, the pound and euro strengthened, closing at around GH¢16.30 and GH¢14.20 respectively.
Speculation and Seasonal Demand at Play
Dr Asiama attributed the January depreciation to temporary and largely non-structural factors. He explained that market behaviour is often influenced by speculation, uncertainty and seasonal demand patterns, particularly at the start of the year when portfolio rebalancing is common.
“A number of factors impact the Cedi at any time, there are short-term factors, uncertainty of any kind, speculative behaviours, some noise in the market, which can just move the rate, not because of anything is wrong. if those movements become persistent that you will be [concerned]. But it will fall in line. We are observing the trends, the final market is on top of the job, and we announced a number of reforms in the financial markets.”
Dr Johnson Pandit Asiama
Analysts share a similar view, noting that early-year foreign exchange pressures are typical as import demand rises and investors adjust positions after year-end. They argue that the scale of the January decline remains modest when compared with the exceptional appreciation recorded last year.
A Stark Contrast to 2025 Performance
The early weakness marks a sharp contrast to developments in 2025, when the cedi staged a dramatic turnaround. After depreciating by 3.9 per cent in January 2025 and extending losses through February and March, the currency reversed course in April.
By May 2025, the cedi had appreciated by about 43 per cent against the dollar since the start of the year. This rally was supported by improved investor confidence, stronger foreign exchange inflows and tighter coordination between fiscal and monetary policy. The momentum was sustained through the rest of the year, with the cedi closing 2025 with a year-to-date gain of 40.7 per cent.
Market watchers say the strong base created in 2025 provides a buffer against short-term volatility in 2026, reducing the likelihood of disorderly movements.
Improving Debt Dynamics Support Confidence
Beyond exchange rate developments, the Bank of Ghana’s data also highlight progress on the fiscal front. Ghana’s public debt trajectory showed further signs of stabilisation in November 2025, offering cautious optimism to investors and the business community after years of fiscal strain.
Total public debt stood at GH¢644.6 billion as at November 2025, equivalent to 45.5 per cent of GDP. The debt stock declined by about GH¢40 billion between September and November 2025, reflecting reduced borrowing and improved cash management.
In dollar terms, public debt eased to US$57.2 billion in November, with fluctuations largely driven by valuation effects rather than fresh borrowing. External debt also moderated, falling to US$29.3 billion, or 23.3 per cent of GDP.
BoG Signals Steady Hand Ahead
The central bank maintains that it remains vigilant and ready to act should market movements become excessive. For now, policymakers appear comfortable allowing the exchange rate to adjust within the managed floating framework while monitoring underlying trends.
As 2026 marches on, the key test will be whether short-term pressures fade as expected or evolve into sustained stress. For now, the Bank of Ghana’s message is clear: the cedi’s retreat follows an extraordinary surge, and stability, not perfection, remains the policy objective.
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