Why The Ghana Cedi Is Losing Ground To The Dollar Again

The Ghana cedi is predicted to depreciate further against the US dollar during the next week, according to Reuters (Aug. 21, 2025). Strong corporate demand for dollars, a constrained foreign exchange supply, and a lack of central bank support through liquidity injections are the reasons for this view. The cedi was trading at about GHS 10.90 to the US dollar at the time of that article, up from GHS 10.70 the week before.

Financial firms such as Stanbic Bank Ghana (through head of trading Chris Nettey) indicate that, this pressure will probably continue until supply and demand in the market are more evenly distributed, possibly as a result of more reforms and more central bank interventions.

Additionally, in an effort to reduce speculative or unbacked foreign exchange outflows, the Bank of Ghana recently announced regulations that forbid banks from paying out foreign currency to large corporations unless those distributions are fully supported by corresponding foreign currency deposits.

According to TradingEconomics, the USD/GHS exchange rate increased by 0.16% from the previous session to 11.0199 on August 22.

Predictive algorithms (such as CoinCodex) indicate an optimistic market mood, placing the current rate at GHS 10.95 and projecting an average increase to GHS 11.08 in August, with possible upsides to 11.16.

The cedi had demonstrated impressive strength earlier in the year. Thanks to strict monetary policy, increased gold and cocoa exports, IMF program support, investor confidence, and foreign exchange inflows, it was praised as the world’s best-performing currency in 2025, gaining by about 50% vs the dollar.

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The cedi rebounded from crisis-era lows of GH₵15+ to approximately GH₵10.3 per USD by mid-June, while headline inflation began easing and reserves increased.

A recent analysis from a BMI (Fitch unit) report raises concerns over Ghana’s growing reliance on gold reserves—now making up about one-third of total reserves. While initially supportive of the cedi, this exposure brings risks: a global drop in gold prices could weaken reserves, hurt export competitiveness, and impair central bank credibility, particularly if liquidating gold assets becomes challenging.

Financial analysts in Ghana are signaling a shift. After a strong rally earlier in the year, the cedi is facing renewed depreciation pressures against the dollar in August 2025. Persistent corporate demand for foreign currency, limited supply, and cautious central bank support are key drivers. Although recent gains were impressive, fragility remains—especially amid structural risks like dependence on gold reserves and election-year dynamics.