After a challenging first quarter in 2025, the Ghanaian cedi has shown a surprising and an outstanding turnaround in the final days of April, 2025.
Strengthened by improving market sentiment and effective central bank intervention, the cedi has gained over GH¢1 against the US dollar in just two (2) days—a 6.6% appreciation that positions it as the best-performing Sub-Saharan African currency for the week.
The first quarter of 2025 painted a bleak picture for the local currency. According to data from the Bank of Ghana (BoG), the cedi depreciated by 5.3% against the US dollar during the period. The losses were most severe in January (5.3%) and February (3.9%), driven by high forex demand, limited dollar inflows, and inflationary pressures.
Against other major currencies, the cedi also struggled—losing 9.2% against the euro and 8.2% against the British pound by the end of March 2025. These figures reflected broader vulnerabilities in Ghana’s external sector and signaled a challenging economic environment.
Market Response and Interventions
April has brought a refreshing change. The cedi opened the final week at GH¢15.31 per US dollar but quickly strengthened to GH¢14.30 by midweek before settling at GH¢14.55 on the interbank market by 11:00 GMT. This performance marked a gain of over GH¢1 in three days—an uncommon but welcome turnaround.
Market analysts attribute the cedi’s recovery to two main factors: declining demand for foreign exchange and strategic intervention by the Bank of Ghana. The central bank auctioned US$190 million during the week through its daily FX forward sales, yet only US$84.8 million was absorbed by the market, resulting in a low acceptance ratio of 44.6%. This underscored easing demand pressures.
Additionally, US$65 million was traded on the interbank market, boosting market liquidity and confidence. The cedi’s sharp appreciation amid these conditions suggests that speculators and businesses are temporarily backing off from aggressive dollar purchases.
Best-Performing Currency in Sub-Saharan Africa
In a notable development, the cedi emerged as the best-performing currency among 15 monitored Sub-Saharan African currencies last week. This distinction reflects both the strength of the cedi’s rally and the comparative weakness of regional peers grappling with similar macroeconomic challenges.
The development boosts confidence not just in the currency, but in Ghana’s broader monetary framework. It also sends a strong signal to international investors that the BoG is willing and able to act swiftly to defend the cedi.
Analysts expect the cedi to benefit further from sustained moderation in foreign exchange demand. Continued central bank vigilance and liquidity support are seen as key to maintaining the current momentum. The Bank of Ghana’s credibility in managing the forex market will play a central role in determining how durable the cedi’s gains prove to be.
Export receipts, disbursements from external financing agreements, and proceeds from cocoa and gold sales could also support further appreciation or at least help contain volatility. However, global factors such as US interest rate policy, oil prices, and geopolitical risks remain external threats that could quickly reverse gains.
Q1 Weakness Still a Cautionary Signal
Despite the current rebound, the cedi is still down 1.74% year-to-date. The weaknesses seen in Q1 2025, particularly the steep losses in the first two months, reflect lingering structural challenges such as high import dependency, rising inflation, and limited export diversification.
The recent gains, while encouraging, must therefore be viewed in context. Without sustained fiscal discipline, improved external inflows, and continued efforts to diversify the economy, the cedi could come under renewed pressure in the months ahead.
The cedi’s recent appreciation signals a potential turning point for Ghana’s macroeconomic environment. It demonstrates the power of effective policy coordination and a well-timed central bank response. Yet, the road to sustained stability will require more than short-term interventions.
As Ghana jogs through the rest of 2025, maintaining investor confidence, ensuring steady forex inflows, and reinforcing monetary and fiscal discipline will be essential to shielding the cedi from future shocks. For now, however, the currency’s strong rebound offers a welcome sign of strength amid a tough economic environment.
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