Ghana’s national currency, the cedi, has rebounded dramatically against major international currencies in the first five months of 2025, marking one of its strongest performances in years and offering a rare moment of relief for the country’s embattled economy.
The appreciation, which many analysts describe as unexpected, has been driven by a mix of tight monetary policy, fiscal consolidation, rising gold and cocoa prices, improved market confidence, and record accumulation of international reserves.
In the year to May 21, 2025, data released by the Bank of Ghana (BoG) shows that the cedi had appreciated by 24.1% against the US dollar, 16.2% against the British pound, and 14.1% against the euro.
The surge has outpaced nearly all other African currencies and reversed much of the losses suffered during the turbulent years of 2021 and 2022.
Tight monetary policy, forex discipline
At the heart of the turnaround is the BoG’s tight monetary policy stance, including stricter enforcement of foreign exchange market regulations, strategic forex injections, and reforms to its monetary operations framework.
In April, the BoG has injected over $492 million into the forex market, easing pressure on demand, smoothing volatility, and reinforcing investor confidence.
This confidence has been bolstered by improved global sentiment and strategic shifts in international markets.
Analysts say that growing friction between the U.S. and China has led to global investors pulling away from dollar-denominated assets and moving toward alternative currencies, indirectly benefiting emerging market currencies like the cedi.
The U.S. Dollar Index, a measure of the greenback against a basket of global currencies, is down 7.5% so far this year, after rising 7% in the first quarter of 2024—providing further room for the cedi to strengthen.
Debt restructuring cuts interest payment from 48%-25%
Another key contributor to the cedi’s rally is the government’s completion of the Debt Exchange Programme which has drastically reduced interest obligations on domestic debt.
Prior to the debt restructuring, Ghana was using nearly 48% of its revenue to service debt between 2021 and 2022.
That figure has now dropped to 25% in 2025, creating vital fiscal space.
This relief is further enhanced by the government not servicing its foreign debt this year, which is another benefit from the debt restructuring.
With more than 45% of Ghana’s total public debt denominated in foreign currency—representing 62% of total liabilities or 49% of GDP—this temporary break has shielded the cedi from external debt servicing pressures and helped stabilise the currency.
GoldBod’s brings forex
Another support to the cedi has come from gold-backed foreign exchange inflows through the state-backed GoldBod initiative. Established to boost forex availability using Ghana’s gold resources, GoldBod has increased gold procurement volumes.
GoldBod’s role
In January, Precious Minerals Marketing Company (PMMC) which has been replaced GoldBod purchased 6.17 tonnes of gold valued at $506 million, averaging 1.54 tonnes weekly.
February saw an uptick to 6.55 tonnes worth $571 million, or 1.63 tonnes each week.
The pace picked up further in March with 7.81 tonnes procured, valued at $699 million—an average of 1.95 tonnes weekly.
By April, when GoldBod became operational, its monthly gold procurement had jumped to 9.2 tonnes, valued at a staggering $889 million and averaging 2.3 tonnes per week.
These figures are more than twice what the PMMC handled during similar periods in 2023 and 2024, marking a turning point in gold trade efficiency.
The rise in gold prices on the global market has amplified the value of these exports, creating strong inflows of forex and enabling the BoG to meet market demand with minimal disruption.
Cocoa prices recovery
In tandem, a recovery in cocoa prices is also adding to forex inflows, further easing pressure on the local currency.
Cocoa exports rose to $1.84 billion representing 19.7% of total exports, compared to $576 million in 2024.
Total gold exports for the first quarter surged to $9.3 billion as of April.
Gold exports hit $5.24 billion representing 56% of total exports far higher than the $2.97 billion recorded during the same period last year.
As a result, Ghana’s gross international reserves have grown to $10.7 billion in April 2025—one of the highest levels in recent years.
The current account surplus, together with net outflows in the capital and financial account, resulted in an overall Balance of Payments surplus of S$1.1 billion.
Govt not paying the debts owed contractors in, energy sector
Another factor contributing to the cedi’s recent appreciation is the government’s continued delay in settling outstanding debts owed to contractors and the energy sector.
The current administration inherited contractor arrears totalling GH¢67 billion, of which GH¢13 billion has been earmarked in the 2025 Budget for the commencement of payments on verified claims.
Meanwhile, debts in the energy sector are estimated to exceed GH¢80 billion.
Ghana’s total public debt currently stands at GH¢769.4 billion—equivalent to US$49.5 billion—representing 55 percent of Gross Domestic Product (GDP).
No target rate for cedi appreciation: BoG Governor
Commenting on the recent performance of the Ghanaian cedi, Governor of the Bank of Ghana, Dr. Johnson Asiama, has clarified that the central bank does not operate with a specific target for the currency’s appreciation.
“We don’t have such a plan on the table that says when the cedi reaches a certain point, we must move to ease the appreciation,” Dr. Asiama stated.
He explained that while the Bank of Ghana is always concerned about excessive currency depreciation, it does not actively pursue a predefined rate of appreciation.
“As much as we don’t want to see the Ghana cedi depreciate excessively, we don’t maintain a target rate that we defend aggressively,” he said.
“People are out there with all sorts of speculations, but remember you haven’t heard the Bank of Ghana playing in that space. We will ensure that volatilities do not become excessive.”
Dr. Asiama emphasised that the central bank’s focus is on managing overall currency stability, with close attention to broader exchange rate dynamics—particularly the real effective exchange rate.
“You may see some swings,” he acknowledged, “but our focus is to ensure that they are not excessive.”
According to him, the current strength of the cedi is underpinned by strong international reserves, robust monetary policy measures, and favourable market sentiment driven by coordinated actions on both the fiscal and monetary fronts.
“We believe that market sentiments are now playing a significant role in the cedi’s sustained appreciation,” he said, noting that improved investor confidence and disciplined policy measures have contributed to the currency’s performance.
Responding to concerns that the strengthening cedi has yet to reflect in reduced market prices, Dr. Asiama urged for patience and pointed to market forces.
“It’s just a matter of time,” he assured. “We also believe that competition may play a significant role in the coming weeks, forcing traders to respond to current market developments.”
Dr. Asiama reaffirmed the BoG’s commitment to maintaining currency stability without abrupt interventions, stressing that the institution remains vigilant in managing any excessive volatilities.
Warnings emerge over possible reversal
Despite the impressive performance, several financial institutions have cautioned that the cedi’s appreciation may be short-lived. Fitch Solutions, for instance, projects that the cedi will end 2025 at GH₵15.50 to the dollar, with an annual average of GH₵15.30. Absa Bank has issued a slightly more optimistic projection, forecasting depreciation to GH₵14.16 per dollar by December 2025.
S&P Global Ratings also predicts that the cedi will resume its depreciation in the second half of the year, particularly as global risk factors—including energy price volatility, interest rate shocks, and slowing global trade—create uncertainty.
In the face of these projections, the BoG remains optimistic.
It is currently rolling out a modernised monetary policy framework that includes more aggressive open market operations and the introduction of longer-tenor BoG instruments.
These new tools are designed to deepen financial markets, improve policy transmission, and provide banks and businesses with better liquidity management options.
Officials at the central bank argue that these reforms will not only support the cedi but also improve credit access for the private sector and strengthen investor confidence in Ghana’s macroeconomic stability.
Externally, Ghana’s ongoing relationship with the International Monetary Fund continues to yield positive results.
Under the three-year Extended Credit Facility (ECF) programme agreed in May 2023, the government has committed to a range of fiscal and structural reforms aimed at stabilising the economy. These reforms have helped strengthen investor confidence and are believed to have supported the cedi’s recent gains.
Adding to the positive momentum, international credit rating agency Standard & Poor’s recently upgraded Ghana’s sovereign rating from selective default to CCC+, citing improvements in reserves, fiscal discipline, and macroeconomic coordination.
While inflationary pressures persist and the risks of external shocks remain high, analysts generally agree that Ghana has made important strides in stabilising its economy.
Whether the cedi’s extraordinary gains can be sustained through the rest of 2025 will depend on the government’s ability to maintain tight fiscal discipline, the BoG’s proactive policy stance, and the continued success of gold-backed forex strategies like GoldBod.
For now, however, Ghanaians are enjoying a rare period of currency stability—and for a nation that has endured years of economic turbulence, the gains are both significant and symbolic.
