The dramatic depreciation of Ghana’s cedi between late August 2025 and early September 2025 stirred fears that President John Dramani Mahama’s administration could be buckling under severe economic strain.
While the first-half of 2025 have delivered some hope, the recent currency collapse exposed deep vulnerabilities with real consequences for governance.
When Nana Akufo-Addo left office in January 2025, the cedi was already in a steep decline. By November 2024, the local currency had depreciated nearly 29% year-to-date, trading around GH₵17.25 to $1 on the retail market. That downward spiral gathered pace following years of chronic depreciation; since 2017, the cedi had lost an astonishing 246% of its value against the dollar, signaling a prolonged erosion of confidence.
Early 2025 offered little immediate respite. In Q1 alone, the cedi depreciated approximately 5.3% against the US dollar, largely concentrated in January and February. By March, the market was seeing exchange rates nearing GH₵15.5 to $1, as inflation-exacerbated economic pressures mounted.
A Turnaround Emerges
Despite mounting fears, 2025 brought a surprising rebound. From January to May, the cedi appreciated 9.25%, strengthening from GH₵14.71 to GH₵13.35 per US dollar—the strongest performance in any first 120 days since redenomination.
By mid-2025, Ghana’s cedi was hailed as one of the best-performing currencies globally, recording an impressive 16% appreciation against the US dollar. This turnaround was driven by aggressive foreign exchange inflows that boosted gross international reserves from US$8.9 billion in December 2024 to US$10.6 billion by May 2025, alongside a 40.6% increase in the central bank’s gold reserves, which rose from 22.3 tonnes to 31.2 tonnes between May 2024 and April 2025.
Complementing these gains were tight and credible monetary and fiscal policies, which won praise from the World Bank for helping to curb inflation and restore confidence in the country’s financial system.
Economic and Political Fallout
However, despite the first half of the year successes, last week, the cedi depreciated heavily, settling at GH¢12.70 per US dollar at retail forex bureaus, a development that has raised concerns among businesses, importers, and consumers alike. The sudden depreciation of the cedi risks eroding the modest stability Ghana had enjoyed in the first half of 2025. Market data revealed the currency fell by 6.58% against the US dollar, 6.20% against the pound sterling, and 6.51% against the euro on the interbank market, fueling immediate price hikes in essential commodities. Currently, the dollar has crossed the GH¢13 mark in some forex bureaus across the country while the interbank rate stood at GH¢11.61, down from around GH¢10.2 in fortnight ago.
If this persists, the cost of staples such as rice, cooking oil, and fuel which saw some reduction recently could surge overnight, placing an additional burden on already stretched households. Inflation, which had shown signs of easing in the first half of the year, is now under renewed pressure, threatening to wipe out gains in consumer confidence and pushing many in the middle class closer to financial distress. Transport operators and traders have already begun threatening to adjust their prices upwards, with fuel prices marginally increasing, triggering fears of a fresh wave of inflationary contagion across the economy.
Public Debt Explosion
Beyond consumer pain, the cedi’s free fall has direct implications for Ghana’s debt profile. With over half of Ghana’s public debt denominated in foreign currencies, each round of depreciation multiplies the cost of debt servicing in local currency terms.
Economists warn that if the trend persists, the country could add billions of cedis to its debt stock within months, undermining recent progress in debt restructuring and fiscal consolidation. This has raised the specter of renewed debt distress, which could complicate Ghana’s engagement with international creditors and raise doubts about the credibility of government’s medium-term debt sustainability targets.
Politically, the latest depreciation wave threatens to erode the massive goodwill that President Mahama’s administration has enjoyed since returning to power. Earlier gains in stabilizing the cedi and reducing public debt by nearly GH¢150 billion had been widely celebrated as a policy success.
However, the renewed volatility risks undermining this narrative, giving ammunition to critics who argue that Ghana’s economy remains overly fragile and dependent on external shocks. Opposition voices have already begun questioning whether the government can deliver lasting stability, or whether the cedi’s decline will become the defining symbol of Mahama’s leadership.
For ordinary Ghanaians, currency instability has become a barometer of governance credibility, and failure to stem the current slide could quickly translate into waning public trust, labor unrest, and broader political discontent.
While the current cedi depreciation sparked legitimate alarm over the stability of Mahama’s government, subsequent aggressive policy actions and external tailwinds could help engineer a dramatic comeback. The cedi’s rebound will not only ease immediate economic pressures but also strengthened Ghana’s fiscal footing.
To tame the current free fall of the cedi, John Mahama’s government must focus more on sustained policy discipline, diversification of revenue, and real-sector growth. Only then can Mahama’s government fully shed the shadow of these early fears of doom.
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