The Ghana cedi, which briefly held the title of Africa's best-performing currency in early June 2025, is now facing significant headwinds. A surge in demand for U.S. dollars and a decline in physical dollar liquidity at local banks have created considerable instability.
After a period of modest recovery supported by central bank interventions and a temporary slowdown in import demand, the cedi has begun to weaken against the dollar. The Bank of Ghana's official exchange rates have erased the gains made earlier in the month, reflecting the challenges the nation's currency is currently experiencing.
Ghana's inflation rate, which had fallen to a three-year low in May, reaching 18.4% from 21.2% in April, is now threatened by this forex instability. The lower inflation was attributed to a stronger cedi and reduced import costs; however, the current dollar shortage is undermining this progress, putting increased pressure on the foreign exchange market.
Cedirates, an online currency monitoring platform, has reported a sharp increase in dollar rates this week as financial institutions struggle to meet demand. Ghanaians are finding it difficult to withdraw dollars from banks, signaling broader instability in the forex market. Reports of dollar shortages are widespread.
The Bank of Ghana faces increasing pressure to stabilize the cedi. Delayed export receipts and increasing import demands are straining the forex market. The central bank anticipates that the expected IMF disbursement will help stabilize the cedi and strengthen the dollar base in the economy. This intervention is seen as crucial to restoring confidence and stability in the financial markets.
Key Factors Affecting the Cedi
- Surging demand for U.S. dollars.
- Decline in physical dollar liquidity at local banks.
- Delayed export receipts.
- Increasing import demands.
- Pressure on the Bank of Ghana to intervene.
Looking Ahead
The coming weeks will be crucial in determining whether the Bank of Ghana's interventions and the anticipated IMF disbursement can effectively stabilize the cedi and prevent further erosion of the progress made in reducing inflation. Monitoring the forex market will be essential for businesses and individuals alike.