Cedi appreciates against Dollar, reversing prior depreciation
The Ghanaian cedi experienced a notable appreciation against the US dollar last week, reversing some of its prior depreciation. On the retail market, the cedi strengthened by approximately 1.38% against the dollar, narrowing its year-to-date depreciation to 2.05%. As of January 27, 2025, the exchange rate stood at GH ₵15.20 per US dollar.
This recent appreciation is attributed to a reduction in speculative demand, following the Bank of Ghana’s announcement of a US$170 million 7-day forward auction aimed at meeting market demand. The central bank has noted that the cedi faced intermittent pressures during the first three quarters of 2024, primarily due to increased foreign exchange demand for energy-related payments, uncertainties surrounding external bond restructuring timelines, COCOBOD financing arrangements, and election-related concerns. By the end of the third quarter, the currency had depreciated by 24.8% year-on-year.
In the broader context, the cedi depreciated by approximately 18% against the US dollar in 2024, influenced by a lower current account surplus due to increased import demand.
The World Bank’s October 2024 Africa Pulse Report identified the cedi as one of the worst-performing currencies in Sub-Saharan Africa for that year. Looking ahead, analysts anticipate that higher import costs and a strengthening US dollar may exert renewed pressure on the cedi in the coming weeks, especially as demand in the manufacturing and energy sectors rises. The Bank of Ghana’s proactive measures, including forward auctions and monitoring of foreign exchange demand, are expected to play a crucial role in stabilizing the currency.
