The Ghana cedi has come under renewed pressure, slipping slightly against the US dollar over the past week as demand for foreign exchange rises to finance imports.
According to Bloomberg, the cedi has depreciated by 4.8% since the start of the year – marking the steepest decline among 23 African currencies monitored by the global financial data firm.
A currency trader at GCB Bank Ltd., Gabriel Engmann, attributed the recent weakness to heightened demand for dollars by importers in the post-Christmas period.
“We’re seeing an increase in demand for dollar by companies to settle import bills, following the Christmas season,” he said in a telephone interview.
“We get inflows from some of our clients, but they’re not enough.”
Despite the recent dip, the cedi’s performance over the past year remains notable. Supported by a rally in gold prices and strong foreign exchange reserves estimated at $13.8 billion, the local currency gained 41% in 2025 — its first annual appreciation since at least 1994 when Bloomberg began compiling such data.
The stronger currency played a significant role in easing inflationary pressures. Ghana’s inflation rate declined sharply to 3.8% in January from 23.5% in the same period last year. In response to improving macroeconomic conditions, the Bank of Ghana cut its benchmark interest rate by a cumulative 1,250 basis points over a 10-month period, bringing it down to 15.5%.
However, demand for the US dollar remains firm at the central bank’s twice-weekly foreign exchange auctions.
At Thursday’s auction, commercial banks reportedlybid a total of $295 million, but the central bank sold only $125 million. Two days earlier, banks sought $356 million, with the regulator again accepting $125 million.
Governor of the Bank of Ghana, Johnson Asiama, has maintained that the country operates a managed floating exchange rate regime.
“What we have is a managed floating system,” he said in response to questions last month. “Our objective is to ensure that the volatilities are not excessive.”
The central bank is expected to continue closely monitoring market developments as it balances exchange rate stability with broader macroeconomic goals.
