The Ghanaian cedi is set to maintain its impressive performance against the US dollar and other major foreign currencies in the near term, buoyed by sustained reserve growth and improving liquidity conditions.
Key factors driving this stability include a robust build-up in Ghana’s foreign exchange reserves and strengthened supply-side interventions. As of April 2025, the nation’s reserves, excluding encumbered assets, surged by an impressive 63% month-on-month to US$7.92 billion, representing 3.7 months of import cover. This marks a notable improvement from the US$7.26 billion (3.3 months of import cover) recorded in March 2025.
The rise in reserves has been driven by higher export earnings from gold and cocoa, coupled with an increase in remittance inflows. These inflows have provided the Bank of Ghana with a stronger buffer to intervene in the foreign exchange market, ensuring enhanced liquidity and stability for the local currency.
Market Analysts Back the Cedi’s Resilience
Research from Databank highlights the cedi’s significant year-to-date (YTD) appreciation of 26.73%, attributing this to targeted interventions and improved market conditions. “The improved reserve position provided the necessary buffers for supply-side interventions, enhancing FX market liquidity and anchoring the cedi,” the report stated.
Further bolstering this outlook is an increase in Ghana’s business confidence index, which rose from 99.7 points in February 2025 to 102.2 points in April 2025. According to analysts, this improvement indicates reduced demand for safer haven assets, signalling growing confidence in the local economy and supporting the cedi’s appreciation.
Weekly Gains Across All Fronts
Last week, the cedi continued its rally against major currencies, benefiting from steady forex inflows and subdued demand pressures. It recorded week-on-week gains of 8.13% against the US dollar, 7.19% against the pound sterling, and 6.41% against the euro. The local currency ended the week trading at a mid-rate of GH¢12.30 to one US dollar on the retail market.
A Promising Start to the Week
The cedi began this week on a strong note, further consolidating its gains across the board. As of today, it is trading at GH¢11.80 to one US dollar, reflecting a remarkable YTD appreciation of 38%.
This performance not only demonstrates the effectiveness of Ghana’s monetary policy measures but also signals growing optimism about the country’s economic recovery. As reserves continue to grow and market liquidity improves, the cedi appears well-positioned to sustain its current trajectory, fostering greater stability in Ghana’s financial markets.
Story by: Mercy Addai Turkson #ahotoronline.com
