By Daniel Bampoe
The Ghanaian cedi is again in turmoil, suffering a sharp depreciation against the United States dollar and raising renewed fears about economic stability.
Recent policies and directives championed by the Bank of Ghana have failed to hold the national currency with prediction that the Cedi may hit GHC14 to $1 by the close of year or even more.
The turbulence in interbank and retail markets has exposed deep structural weaknesses in the economy, despite earlier gains that positioned the cedi among the world’s top-performing currencies.
A Currency Under Siege
As of September 5, 2025, the interbank rate stood at GH¢11.96 to the dollar. At forex bureaus, however, the greenback sold for as high as GH¢13.00, creating a significant spread between official and retail markets. The black market as of Friday was trading at GHC13.50 to $1.
Analysts warn that the depreciation may worsen, with projections placing the interbank rate at GH¢12.20 by the end of the month if corrective measures fail.
The slide has been driven by tight foreign exchange liquidity and strong corporate demand, particularly from importers who rely heavily on the dollar for international trade.
According to IC Research, “further interbank weakness toward our fair value of GH¢12.2/US dollar ±0.5 is expected as market correction continues amid tight FX supply and elevated FX demand.”
In August alone, the cedi fell sharply from GH¢11.70, a development linked to forex shortages and increased business demand ahead of the peak trading season.
Bank of Ghana’s Gamble Backfires
Efforts by the Bank of Ghana (BoG) to clamp down on speculative activity have contributed to the volatility. The central bank restricted cash withdrawals of foreign currency not backed by equivalent deposits in an attempt to manage demand.
Instead, this policy diverted pressure into the parallel market, where the dollar now trades significantly higher than the official rate.
This has deepened the gap between regulated markets and forex bureaus, fueling speculative behaviour and eroding public confidence.
From Best To Worst
The cedi’s current woes contrast sharply with its earlier performance this year.
Between March and June 2025, the local currency gained nearly 50% in value, buoyed by record gold prices and strong investor inflows.
Bloomberg even ranked the cedi as the best-performing currency worldwide in the second quarter of the year.
But those gains are now evaporating. Bloomberg reported on September 4 that the cedi weakened by 13% in the third quarter alone.
Despite still showing a year-to-date appreciation of 20.35%, momentum has reversed dramatically, casting doubt on the sustainability of previous successes.
A Deeper Look: Why the Cedi Is Slipping
The recent fall highlights the fragility of Ghana’s economic fundamentals. While external conditions—such as high gold prices and a subdued U.S. dollar—remain favourable, domestic challenges are undermining stability.
Remittances, a critical source of foreign exchange, have slowed considerably due to the initial appreciation of the Cedi.
The earlier strength of the cedi distorted incentives: money sent from abroad converted into fewer cedis, discouraging inflows.
Many Ghanaians abroad are holding back transfers, waiting for the cedi to weaken further so their dollars fetch more value.
Meanwhile, importers rushed to take advantage of the stronger cedi earlier in the year, flooding the market with demand for dollars to restock ahead of the festive season.
This surge has coincided with signs that the BoG has scaled back its interventions, possibly in response to International Monetary Fund (IMF) concerns about heavy dollar injections to prop up the cedi.
In the first quarter of 2025, the BoG pumped $1.4 billion into the market to support the cedi.
The IMF later cautioned against excessive interventions, and the Bank pledged to introduce a formal framework for forex management by September.
The recent slowdown in dollar supply may reflect preparations for that framework.
Echoes Of The Past
The latest crisis is a reminder of Ghana’s currency struggles in recent years.
In 2022, the cedi experienced one of its steepest depreciations in history, trading above GH¢15 to the dollar before the IMF stepped in with a bailout package.
Today’s developments suggest history may be repeating itself, despite earlier optimism.
Ghana’s over-reliance on imports, narrow export base, and high debt servicing obligations continue to exert pressure on foreign exchange reserves.
The Economic Impact
The cedi’s volatility has immediate consequences for businesses and households. Importers face rising costs, which are quickly passed on to consumers through higher prices of goods and services.
Inflationary pressures, which had eased in the first half of 2025, now threaten to rebound, eroding purchasing power and undermining confidence.
Ordinary Ghanaians are already feeling the pinch in the prices of fuel, cement, and food items.
Economists also warn that if the cedi’s decline continues unchecked, the government’s efforts at economic stabilization could unravel.
For now, whether the cedi regains stability will depend largely on external inflows, fiscal discipline, and the BoG’s ability to manage the market without distorting it.
With gold prices still above $3,500 per ounce and foreign reserves exceeding $11 billion, Ghana theoretically has the resources to defend its currency.
