Ghana’s local currency, the cedi, is poised to make history as it records its first-ever annual appreciation against the US dollar since its redenomination in 2007.
According to Bloomberg data, the Cedi has appreciated by about 16 percent against the U.S. dollar from the start October to date, erasing the third quarter depreciation of 14 percent.
Data from commercial banks now show that the cedi’s year-to-date (YTD) appreciation stands at 37%. This shows a stark contrast to the average annual depreciation of 14.9% between 2008 and 2024.
A closer analysis of price quotes from commercial banks since the start of the year also revealed that within a single week from October 13 to 17, 2025, the cedi appreciated by 9.5% against the dollar. The cedi’s remarkable turnaround is attributed to a combination of disciplined monetary policy, enhanced foreign exchange inflows, and record interventions by the Bank of Ghana. Strong inflows from gold and cocoa exports, as well as improved fiscal management under the IMF Extended Credit Facility (ECF) programme, have also contributed to the cedi’s surge.
The cedi’s performance has long been a key barometer of Ghana’s economic health, often influencing inflation expectations, credit ratings, and investor sentiment. The start of the last two IMF programmes, implemented in 2015 and 2023 respectively, both coincided with periods of sharp currency depreciation.
“I’ve seen this for many years. I started central banking some 30 years ago. The phenomenon [of dollarisation] has been there, and so we are tackling it to make the local currency the sole legal tender,” Bank of Ghana Governor, Dr. Johnson Asiama, speaking at the IMF/World Bank Spring Meetings in Washington, said noting that, his tenure is focused on building a central bank that is “agile and future-ready” while making the cedi the currency of choice for domestic transactions.
He acknowledged that dollarisation remains a major challenge, noting that the widespread use of foreign currency undermines the effectiveness of monetary policy and weakens confidence in the cedi. Nonetheless, he expressed optimism that the reforms underway will consolidate gains made so far.
Key Factors Driving the Cedi’s Appreciation:
The Bank of Ghana’s strategic interventions in the foreign exchange market have helped stabilize the currency as well as facilitate record foreign exchange inflows.
Ghana’s total export revenue is projected to reach US$25 billion in 2025, a 30% increase compared to the previous year, with gold exports expected to account for over 60% of the total.
Also, the government’s commitment to fiscal discipline and economic reforms has boosted investor confidence alongside the IMF’s Extended Credit Facility programme which has provided financial support and stability to Ghana’s economy.
Outlook
The cedi’s appreciation has strengthened Ghana’s credit outlook, with the debt-to-GDP ratio falling below 50% for the first time in years.
Dr. Asiama has expressed optimism that the reforms underway will consolidate gains made so far and make the cedi the currency of choice for domestic transactions
According to the Ghana Association of Banks, a key factor has been the Bank of Ghana’s decision to revise its forex market interventions, moving from weekly auctions to spot sales for commercial banks, enhancing market efficiency.
Its Chief Executive, John Awuah, told Joy Business that the cedi’s rebound reflects “recent market developments,” also linking the performance to the Bank of Ghana’s review of the Net Open Position (NOP) for commercial banks.
Market analysts further believe that the cedi’s strength is being supported by tight fiscal and monetary policies, rising export revenues, and improved investor confidence.
They also argue that, given recent market reforms, the cedi’s strong performance may not end anytime soon.
Central Bank’s FX market intervention
Earlier this month, the Governor of the Bank of Ghana, Dr. Johnson Asiama, announced that the central bank would begin foreign exchange (FX) intermediation under the Domestic Gold Purchase Programme from October 2025, with plans to sell up to $1.15 billion during the month.
These sales are being conducted on a spot basis through twice-weekly, price-competitive auctions open to all licensed banks.
Dr. Asiama explained that the initiative aims to deepen the interbank FX market, enhance price discovery, and reduce volatility all while maintaining transparent and market-neutral operations.
He emphasised that the overarching goal remains to stabilise the exchange rate, ensure a level playing field, and support sustainable liquidity in the banking system.
BoG to achieve full de-dollarisation
Consequently, Dr Asiama notes that one of his top priorities is to end the long-standing reliance on the U.S. dollar for domestic transactions.
He wants to make the Ghana cedi the sole currency of trade and payment in the country describing the persistence of dollar use in Ghana’s economy as a structural weakness that undermines the effectiveness of monetary policy.
“So, my mandate is clear to achieve price and financial stability. It’s been eight months now. I believe we are on course. We are on course towards achieving that. But a couple of things bother me.
“First of all, the issue of dollarisation. You know, I’ve seen this for many years. I started central banking some 30 years ago. The phenomenon has been there, and so we are tackling it,” he said.
By Adnan Adams Mohammed
