Ghana’s local currency, the cedi, has made an impressive turnaround on the forex market, registering record gains against its major trading currencies.

According to the latest Summary of Economic and Financial Data released by the Bank of Ghana (BoG) in May 2025, the cedi has appreciated by 24.1% against the US dollar, 16.2% against the British pound, and 14.1% against the euro—marking its strongest performance in years.

This remarkable rally comes after a period of steep depreciation and sustained pressure on the currency. It also reflects the impact of deliberate policy actions and favourable external sector developments, positioning the cedi at the centre of Ghana’s ongoing macroeconomic recovery.

As of May 2025, the cedi is trading at approximately GH₵11.85 to the US dollar, GH₵15.84 to the British pound, and GH₵13.34 to the euro. These figures mark an all-time high in appreciation terms, reversing a trend that saw the currency significantly weakened in the past three years.

The Bank of Ghana attributes the currency’s upward momentum to a combination of sound fiscal management, improved gold reserves, and investor confidence stemming from prudent monetary policy.

“The appreciation reflects a combination of factors, including prudent monetary policy, improved market sentiment, and external sector gains,” stated Dr. Johnson Asiama, Governor of the Bank of Ghana.

What’s Driving the Cedi’s Performance?

At the heart of the cedi’s resurgence is a policy mix of fiscal tightening and strategic economic interventions. The government has implemented measures to rein in public spending and control inflation, which has steadily declined over the past two quarters. These moves have been complemented by rising gold reserves and stronger foreign exchange inflows, particularly from remittances and oil exports.

Additionally, the central bank’s proactive role in managing inflation expectations and ensuring a tight monetary stance has helped stabilise the currency and boost investor confidence in Ghana’s macroeconomic outlook.

The appreciation of the cedi is generating optimism among import-dependent businesses, especially in the fuel, food, and automobile sectors. For these industries, a stronger cedi means reduced import costs, improved pricing for consumers, and potentially higher margins for traders.

“With the dollar now at GH₵11.85, we’re already seeing some downward adjustment in freight and import charges,” said Kwabena Asiedu, a local importer of auto parts. “If this trend continues, we expect prices of goods to stabilize, or even fall, by the next quarter.”

Amid this renewed business confidence, industry stakeholders are calling for a review of Ghana’s import duty regime. They argue that combining a strong currency with more competitive import duties could enhance trade, reduce inflation, and support private sector growth.

Economists Urge Measured Optimism

Despite the positive outlook, economists are urging caution. They note that while the cedi’s performance is a welcome development, it is essential to maintain fiscal discipline and continue structural reforms to ensure the gains are sustained.

“Currency strength is good, but it must be underpinned by real economic improvements, not just short-term flows,” cautioned Dr. Lydia Mensah, an economist at the University of Ghana. “We need to watch inflation, debt levels, and our external sector balance closely.”

Indeed, the country’s public debt stock rose slightly to $49.5 billion in March 2025, up from $49.4 billion in February. In cedi terms, Ghana’s debt stood at GH₵769.4 billion, representing 55% of GDP. Although the domestic component of the debt fell marginally from GH₵328 billion to GH₵326.9 billion, the external component increased.

In the short term, both the government and the central bank face the challenge of consolidating the current momentum. This will require maintaining macroeconomic stability, enhancing domestic production, and deepening export diversification to reduce reliance on imports.

The continued appreciation of the cedi also opens the door for further monetary easing, potentially lowering interest rates to support borrowing and investment by small and medium-sized enterprises (SMEs).

For now, the cedi’s record-breaking rise offers a glimmer of hope to households and businesses alike. But turning this short-term success into long-term stability will demand unwavering policy discipline and coordinated economic planning.