The Ghanaian cedi is projected to end 2025 at GH₵15.50 to one US dollar, with an annual average exchange rate of GH₵15.30/US dollar, according to a forecast by Fitch Solutions. This outlook suggests a higher end-of-year rate than the GH₵14.00 prediction made by Absa Bank. At the beginning of the year, the cedi was trading at GH₵15.83 to the US dollar, marking a challenging start for the local currency.
In a report titled “High Gold Prices Will Shield Ghanaian Economy From Tariff Fallout,” the UK-based research and analytics firm highlighted the Bank of Ghana’s (BoG) strategic focus on stabilizing the cedi. This effort, Fitch noted, will be bolstered by elevated global gold prices, a critical factor in Ghana’s economic resilience.
Gold Prices: A Shield Against Volatility
Fitch Solutions emphasized the role of gold in cushioning the economy amid global uncertainties. “We expect the BoG to focus on keeping the cedi stable, facilitated by elevated gold prices,” the report stated. The commodities team at Fitch predicts that gold prices will reach a record average of US$3,100 per ounce in 2025, representing a 29.7% increase from 2024. This projection aligns with continued geopolitical tensions, market expectations of interest rate cuts by the US Federal Reserve, and ongoing uncertainty surrounding US trade policies.
Reduced Energy Costs: A Boost to External Stability
The report also pointed to Ghana’s reduced energy import bill, driven by declining global oil prices, as another factor strengthening the country’s economic position. This development is expected to drive Ghana’s current account surplus to an unprecedented 6.9% of GDP in 2025. “Coupled with a lower energy import bill due to declining oil prices, this will significantly enhance Ghana’s external position,” the report noted.
Fitch Solutions further projected an increase in Ghana’s foreign exchange reserves, rising from US$6.4 billion to US$11.5 billion by the end of 2025. This improvement is expected to equip the BoG to manage potential currency volatility resulting from global market risks.
Cedi Performance: A Global Leader
The Ghanaian cedi has already shown remarkable performance in 2025, appreciating by 17.17% against the US dollar as of May 19. Currently trading at GH₵13.50 to the dollar on the retail market, the cedi has earned its place as the world’s best-performing currency so far this year. This rally follows a 2.3% week-on-week appreciation against the dollar and a 3.5% gain against the euro in the past week alone.
Challenges Ahead
Despite the cedi’s strong showing, Fitch cautioned that the Bank of Ghana’s efforts to maintain stability will face challenges. External factors, including shifts in global trade policies and market sentiment, could create headwinds. However, the strengthened external position and robust foreign exchange reserves should help mitigate these risks.
With gold prices soaring and energy costs declining, the Ghanaian economy appears poised to weather external pressures, providing a solid foundation for the cedi’s performance in the coming months.
Story by: Mercy Addai Turkson #ahotoronline.com
