The Ghana cedi is facing renewed pressure, with its depreciation against the US dollar reaching 9.5% in the first nine months of 2026, according to the Bank of Ghana’s latest economic and financial data.
The cedi is currently trading at approximately GH¢11.55 to the US dollar, after ending August weaker despite a brief recovery earlier in the month when the dollar traded at around GH¢10.95. The currency closed 2025 at GH¢10.45, meaning it has shed a significant portion of the gains recorded last year, when it appreciated by about 29% against the dollar between January and December.
The weakness has extended to other major trading currencies. The cedi has depreciated by 9.0% against the British pound, trading at about GH¢15.45, while it has lost 7.3% against the euro, with the euro trading at approximately GH¢13.24.
A Reversal of Fortune
The latest movement marks a sharp reversal from the cedi’s strong performance in 2025, when the currency was celebrated as one of the world’s best-performing. At the start of 2025, the cedi stood at GH¢15.30 to the dollar. By December, it had strengthened to GH¢10.45 — a gain of nearly 29%.
The World Bank, in its 10th Ghana Economic Update, commended the Bank of Ghana for its interventions that drove the cedi’s turnaround, noting that the real effective exchange rate appreciated by 28% while the nominal effective exchange rate rose by 26% in 2025.
However, the sharp appreciation in the second quarter of 2025 created exchange rate uncertainty and widened the gap between the official and parallel markets. The parallel-market premium averaged 12.4% between June and December 2025.
Energy Sector and Dividend Payments Drive Demand
The World Bank attributes the depreciation in part to increased foreign-exchange demand from the energy sector and dividend payments by some private corporations. The pressure has emerged despite continued foreign-exchange inflows supported by Ghana’s trade surplus, highlighting the sensitivity of the cedi to movements in demand for foreign currency.
Bank of Ghana Governor Dr. Johnson Pandit Asiama has repeatedly pointed to energy sector demand and seasonal dividend repatriation by multinational companies as primary drivers of the currency’s weakness. Market analysts have echoed this assessment, noting that unmet corporate demand for hard currency on the interbank market continues to weigh on the cedi.
Strong Fundamentals Fail to Halt Slide
The paradox of a weakening currency amid strong economic fundamentals is explained by the nature of the demand pressures. Ghana’s trade surplus surged to US5.7 billion in the same period of 2025, driven primarily by gold exports expanding to US$12.5 billion — a 49% year-on-year increase.
Gross international reserves rose to US14.4 billion as of mid-May 2026. The current account surplus widened to US2.43 billion a year earlier.
Yet the stronger reserve position has not translated into cedi stability. The cedi depreciated by 8.4% against the dollar in the interbank market in the year to May 15, 2026, while market analysts estimated losses had widened further in subsequent weeks.
A New Framework for FX Operations
In response to the volatility, the Bank of Ghana introduced a comprehensive Foreign Exchange Operations Framework in November 2025, designed to improve transparency, build reserves, and manage excessive exchange rate volatility.
Under the framework, the central bank prioritises reserve accumulation, market-neutral intermediation, and limited interventions only to correct disorderly market conditions. The BoG conducts FX auctions twice weekly, with monthly targets pre-announced to licensed banks. Each bank can submit up to three bids, with a minimum of US250,000.
Governor Asiama has stressed that the central bank is not engaging in extraordinary market intervention despite the depreciation pressures. “We are not intervening; we are rather building reserves. The auctions are a regular part of our intermediation efforts,” he said. He added that approximately US$1 billion was programmed for release into the market in May alone, and that banks were aware of the central bank’s continued presence.
The Bank of Ghana has characterised recent movements as part of normal exchange-rate volatility under the country’s managed floating exchange-rate regime.
Parallel Market Shows Improvement
The World Bank has noted some improvement in the parallel foreign-exchange market. As the cedi stabilised into early 2026, the premium between the official and parallel exchange rates narrowed, averaging 8.1% in the year to June 2026, down from the 12.4% average recorded between June and December 2025.
However, the World Bank cautions that the premium remains elevated, suggesting that underlying pressures in the foreign exchange market have not been completely eliminated. Sustaining the cedi’s stability will depend on policy credibility, stronger reserves, and effective management of the forex market, the Bank said.
Political and Economic Context
The cedi’s depreciation carries significant political and economic implications. President John Dramani Mahama, speaking at the Cedi@60 celebrations in October 2025, stated: “What we seek is a stable currency and not a strong Ghana cedi” — a position the Bank of Ghana has reinforced through its new FX framework, which prioritises stability over artificial strength.
The IMF, in its 2026 Article IV consultation, noted that Ghana’s exchange rate remains largely in line with economic fundamentals, with the 2025 appreciation correcting a previously estimated undervaluation. The Fund projected a moderate real depreciation through 2033 under its baseline scenario.
Databank Research has revised its year-end cedi forecast to GH¢12.20 to the US dollar, citing expectations of stronger foreign-exchange inflows and an improved external position. The firm noted that while gross reserves appear robust, the government’s ambitious reserve agenda — targeting roughly 15 months of import cover by 2028 — will require stronger accumulation efforts that may temper the scale of spot market interventions.
What Lies Ahead
The recent depreciation underscores the vulnerability of the cedi to seasonal foreign-exchange demand and corporate outflows, even as Ghana’s external position remains fundamentally strong.
The country’s reserve position could receive a further boost with expected inflows of more than US$500 million from development partners before the end of the third quarter of 2026. The government’s Ghana Accelerated National Reserve Accumulation Programme, underpinned by the Gold-for-Reserves initiative, targets 15 months of import cover by 2028.
For now, however, the cedi’s trajectory will depend on the interplay between robust export earnings — particularly from gold, which has benefited from record global prices — and persistent demand-side pressures from the energy sector and corporate repatriation. As the Bank of Ghana continues to implement its new FX operations framework, the coming months will test whether policy measures can restore the stability that defined the currency’s remarkable 2025 performance.
About Ghana’s Exchange Rate Regime
Ghana operates a managed floating exchange-rate regime, under which the value of the cedi is primarily determined by market forces, with the Bank of Ghana intervening only to correct disorderly market conditions. The central bank’s Foreign Exchange Operations Framework, introduced in November 2025, formalises this approach through:
· Reserve accumulation: Building foreign exchange buffers to enhance economic resilience
· Market-neutral intermediation: Facilitating FX flows through commercial banks without distorting market pricing
· Transparency: Regular publication of operational data and pre-announced auction targets
· Volatility management: Structured interventions using a “discretion under constraint” approach
Key Exchange Rate Metrics (2026):
· Cedi/USD rate (September 2026): GH¢11.55
· Year-to-date depreciation vs. USD: 9.5%
· Year-to-date depreciation vs. GBP: 9.0% (GH¢15.45)
· Year-to-date depreciation vs. EUR: 7.3% (GH¢13.24)
· 2025 full-year appreciation vs. USD: ~29%
· 2026 H1 depreciation vs. USD: 8.1%
· Gross international reserves (February 2026): US$14.5 billion (5.8 months of import cover)
· Trade surplus (H1 2026): US$8.8 billion (up 53% year-on-year)
· Parallel market premium (H1 2026): 8.1% (down from 12.4% in H2 2025)
