Cedi slips 8.4% against dollar despite easing inflation and lower interest rates

Ghana’s local currency weakened by 8.4 per cent against the United States dollar in the first four months of 2026, even as inflation dropped sharply and interest rates continued to decline, according to the latest Summary of Economic and Financial Data released by the Bank of Ghana.

The data, published on 19 May 2026, showed the cedi trading at GH¢11.4125 to the dollar in early May, compared to GH¢10.95 at the close of January. The cedi also lost ground against other major trading currencies, depreciating by 7.5 per cent against both the British pound and the euro.

The pound traded at GH¢15.2055, while the euro sold at GH¢13.2695 during the review period.

Despite the depreciation, the Real Effective Exchange Rate index stood at 93.5 in April 2026, suggesting that the cedi remained relatively competitive against the currencies of Ghana’s major trading partners after adjusting for inflation.

Inflation slows further

Consumer inflation remained subdued in April, reinforcing signs of improving macroeconomic stability.

Year-on-year inflation was recorded at 3.4 per cent in April 2026, slightly above the 3.2 per cent recorded in March, but still one of the lowest rates seen in recent years. Food inflation stood at 2.2 per cent, while non-food inflation was recorded at 4.2 per cent.

The continued moderation in inflation has largely been supported by tighter monetary policy, relative exchange rate stability earlier in the year, and favourable base effects.

The central bank reduced its Monetary Policy Rate to 14.0 per cent in April 2026 from 15.5 per cent in January. This marked a significant decline from the 28.0 per cent policy rate recorded in April 2025.

On a monthly basis, inflation increased by 0.9 per cent in April, driven by a 0.8 per cent rise in food prices and a 1.1 per cent increase in non-food items.

Oil prices surge while cocoa prices fall

Global commodity price developments remained mixed, with rising crude oil prices posing fresh risks to inflation and exchange rate stability.

Brent crude oil prices climbed by 67.4 per cent year-to-date to US$103.20 per barrel in April 2026, increasing concerns over higher import costs and pressure on Ghana’s external sector. The realised crude oil price averaged US$110.70 per barrel during the period.

Gold prices, however, continued to strengthen, offering some relief to Ghana’s export earnings. Gold traded at US$4,724.10 per fine ounce in April, representing a 9.4 per cent increase since the start of the year. The realised gold price averaged US$4,466.20 per ounce.

Cocoa prices moved in the opposite direction, declining sharply by 43.2 per cent year-to-date to US$3,350.10 per tonne as global supply conditions improved after prolonged production shortages in recent years.

Interest rates continue downward trend

Interest rates across the money market continued to decline following the central bank’s monetary policy easing.

The average lending rate dropped to 16.33 per cent in April 2026 from 27.40 per cent during the same period last year.

Treasury bill yields also declined significantly, with the 91-day bill settling at 4.90 per cent. The 182-day and 364-day instruments traded at 6.84 per cent and 10.02 per cent respectively.

The interbank weighted average rate also fell to 10.36 per cent in April, reflecting stronger liquidity conditions within the banking sector.

External reserves remain strong

Ghana’s gross international reserves stood at US$13.95 billion in April 2026, enough to cover 5.5 months of imports, comfortably above the commonly accepted three-month benchmark.

Net international reserves were recorded at US$10.99 billion.

Meanwhile, total public debt reached GH¢674.1 billion as of March 2026, representing 42.2 per cent of Gross Domestic Product. External debt accounted for GH¢313.6 billion, equivalent to 19.6 per cent of GDP, while domestic debt stood at GH¢360.4 billion, representing 22.6 per cent of GDP.

Ghana Stock Exchange posts strong gains

The Ghana Stock Exchange continued its strong rally in 2026 as investor confidence improved amid easing inflation and declining interest rates.

The GSE Composite Index rose by 72.5 per cent year-to-date to 15,130.5 points in April 2026. Market capitalisation also increased by 63.8 per cent to GH¢281.8 billion.

Banking stocks remained among the strongest performers on the local bourse, with the GSE Financial Stock Index surging by 90.2 per cent during the period as investor confidence in the financial sector strengthened following the Domestic Debt Exchange Programme.

Mobile money activity expands

Mobile money transactions maintained strong growth momentum in April 2026.

Transaction values reached GH¢493.2 billion during the month, with total transaction volumes hitting 967 million.

Registered mobile money accounts increased to 83 million, while active accounts stood at 26 million. Interoperability transaction values were recorded at GH¢5.8 billion.

Analysts say the continued depreciation of the cedi, rising crude oil prices, and weaker cocoa revenues could place renewed pressure on Ghana’s external position in the months ahead.

However, falling inflation and lower borrowing costs are expected to support private sector activity and broader economic growth.

Attention is now turning to the Monetary Policy Committee meeting of the Bank of Ghana currently underway, where markets are watching closely for signals on interest rate direction and possible measures to support the local currency.