Ghana’s currency has suffered a sharp reversal in fortunes in 2026, with the cedi losing ground against the US dollar, British pound and euro after recording significant gains against the same currencies a year earlier.
The Bank of Ghana’s (BoG) September 2026 Monetary Policy Report shows that the cedi depreciated by 7.11% against the US dollar on a year-to-date basis in August 2026 on the interbank market, marking a significant departure from the strong performance recorded over the corresponding period in 2025.
The latest figures highlight the renewed pressure on the domestic currency despite relatively lower volatility in the foreign exchange market compared with the last four years. They also raise questions about the sustainability of the cedi’s exchange rate performance as seasonal demand for foreign currency threatens to intensify in the coming months.
The cedi’s depreciation against the dollar was accompanied by losses against other major international currencies, indicating that the pressure extended beyond a single exchange rate relationship.
Cedi Surrenders Gains Against Major Currencies
According to the BoG report, the cedi depreciated by 7.78% against the British pound and 6.09% against the euro on a year-to-date basis in August 2026.
The performance contrasts sharply with the corresponding period in 2025, when the domestic currency appreciated by 28.95% against the dollar, 19.49% against the pound and 14.08% against the euro.
The reversal represents a significant change in Ghana’s foreign exchange fortunes, particularly after the strong appreciation recorded last year offered relief to importers and other businesses exposed to foreign currency transactions.
A weaker cedi generally increases the local currency cost of imported goods, foreign-denominated obligations and certain production inputs. Businesses that rely heavily on imported raw materials, machinery, fuel and other supplies could therefore face renewed cost pressures if the depreciation persists.
Consumers may also feel the effects when higher import costs feed into the prices of goods and services. However, the extent and timing of any pass-through will depend on factors such as inventory levels, pricing decisions, domestic competition and the behaviour of international commodity prices.
Dollar Strength Adds to Exchange Rate Pressure
The central bank attributed some of the currency pressure to developments in international financial markets, where the US dollar strengthened in September following recent policy rate hikes by the Federal Reserve.
The report explained the external and domestic developments shaping the exchange rate outlook.
“On the international market, the US dollar strengthened in September due to the Fed’s recent policy rate hikes and, as a result, EMDE currencies came under pressure. On the local FX market, pressures on the cedi were muted in August 2026 due to moderated demand pressures and BoG’s support to the market. In the outlook, seasonal demand pressures coming from energy and commerce sectors may weigh on the cedi”
The stronger dollar has implications for emerging market and developing economy currencies, which can face additional pressure when international financial conditions become less favourable.
Higher US interest rates can increase the attractiveness of dollar-denominated assets, potentially influencing global investment flows and demand for other currencies. For Ghana, these developments interact with domestic demand for foreign exchange and the central bank’s interventions in the local market.
Although the BoG indicated that local pressures were muted in August, its warning about seasonal demand suggests that the relative calm may face fresh challenges.
Lower Volatility Offers Limited Comfort
Despite the cedi’s depreciation, the report highlighted one positive development: the currency was less volatile during the first 185 transaction days of 2026 than during the last four years.
Lower volatility can help businesses plan payments, manage foreign currency exposure and make pricing decisions with greater confidence. It can also reduce the uncertainty associated with sudden exchange rate movements.
However, lower volatility does not necessarily mean that a currency is strengthening. A currency can depreciate over time while experiencing fewer abrupt daily fluctuations.
This distinction is important for businesses and investors assessing the cedi’s performance. The latest figures suggest that exchange rate stability and currency appreciation remain separate issues, with the cedi recording a more measured pattern of movement despite its overall decline.
The BoG’s support to the foreign exchange market and moderated demand pressures helped contain local pressures in August, according to the report. The durability of those conditions will depend partly on foreign exchange supply and demand in the months ahead.
Trade-Weighted Measures Confirm Broad-Based Weakness
The cedi’s depreciation was also evident in measures that assess its performance against currencies associated with Ghana’s trading partners and foreign exchange transactions.
On a year-to-date basis in August 2026, the currency depreciated by 6.80% in nominal trade-weighted terms and 7.58% in nominal forex transaction-weighted terms.
These figures compare with appreciations of 14.22% and 21.60%, respectively, over the same period in 2025.
The real exchange rate indicators also reflected the currency’s weaker position. In real bilateral terms, the cedi depreciated by 8.47% against the dollar, 8.15% against the pound and 6.97% against the euro.
The report further showed that the cedi depreciated by 7.27% in real trade-weighted terms and 8.35% in real forex transaction-weighted terms.
By comparison, the corresponding measures recorded appreciations of 17.34% and 20.15%, respectively, in 2025.
Real exchange rate measures account for relative price movements between economies and provide a broader perspective on the currency’s performance beyond nominal exchange rate changes.
The simultaneous weakness across these indicators reinforces the scale of the reversal from the previous year’s appreciation.
Seasonal Demand Could Test Cedi Stability
The BoG’s warning about seasonal demand from the energy and commerce sectors places additional attention on the balance between foreign currency supply and demand.
Energy-related payments and commercial transactions can increase the need for dollars and other foreign currencies, potentially placing pressure on the cedi when demand rises faster than available supply.
The currency’s trajectory will therefore depend on how these pressures develop alongside international dollar movements and the central bank’s market support.
The 2025 appreciation provided considerable relief, but the 2026 depreciation shows that exchange rate gains can reverse when market conditions change.
As Ghana moves through the final months of the year, businesses, importers and financial market participants will be watching closely to see whether the cedi can withstand seasonal demand pressures without a renewed bout of volatility.
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