When the cedi weakens, everyone feels it
The Ghana cedi breaching the GHS11 mark against the US dollar in commercial bank trading is more than a headline. It is a signal of mounting pressure in the foreign exchange market that demands urgent attention.
While the cedi remains Africa’s best-performing currency in 2025, with a year-to-date appreciation of 36 per cent, the recent depreciation underscores the volatility that continues to plague the nation’s currency landscape.
At the heart of this development lies a familiar challenge: rising demand for dollars amid constrained supply. Businesses are scrambling to secure foreign exchange to finance end-of-year imports, while others are buying in anticipation of future scarcity.
This speculative behaviour, though understandable, exacerbates the strain on available reserves and fuels further depreciation.
The Bank of Ghana’s interbank rate hovers around GHS10.90, yet forex bureaus are selling dollars at levels as high as GHS12.20. This divergence reflects a market grappling with uncertainty.
Commercial banks have flagged limited inflows from the central bank, with recent auction data revealing a stark mismatch. Over USD300 million in demand was met with just USD100 million in supply.
The central bank’s decision to skip scheduled auctions in late July, the first such absence since April, has only deepened market anxiety.
For forex traders, this environment presents both opportunity and risk. Volatility may offer short-term gains, but it also heightens exposure to sudden shifts in policy or sentiment. For businesses, especially import-dependent firms, the rising cost of dollars threatens profit margins and pricing stability. Individuals too are not spared.
The ripple effects of a weakening cedi are felt in higher prices for imported goods, increased tuition fees for foreign education and elevated costs for overseas medical care.
The Bank of Ghana has rejected claims of a dollar shortage, attributing part of the demand to speculative activity.
While it maintains that external reserves remain strong, the market’s reaction suggests a disconnect between official assurances and perceived realities.
Measures such as restricting large foreign exchange withdrawals and plugging leakages in remittance inflows are steps in the right direction, but they must be matched with consistent communication and transparent interventions.
Ultimately, the cedi crossing GHS11 should serve as a wake-up call. Ghana’s currency resilience cannot rest solely on past performance metrics. It must be anchored in proactive policy, disciplined fiscal management and a credible strategy to balance demand and supply. Investors, businesses and households deserve stability, not surprises.
