The Ghanaian cedi has experienced a significant resurgence, appreciating by 16.7% between January and May 2025. This positive trajectory is attributed by the opposition National Democratic Congress (NDC) to the strategic policy decisions implemented under the leadership of former President John Dramani Mahama. The NDC asserts that these deliberate interventions have been instrumental in reversing the cedi’s previous decline and stabilizing the Ghanaian economy. Sammy Gyamfi, Acting Chief Executive Officer of the Ghana Gold Board, has outlined several key factors contributing to this remarkable turnaround.
One crucial element is the stringent monetary policy adopted by the Bank of Ghana. In March 2025, the Bank increased the Monetary Policy Rate from 27% to 28%, a move aimed at curbing inflation and moderating demand-pull pressures on the cedi. This decision, coupled with the Bank’s open market operations, helped to tighten monetary conditions and support the currency’s value. The increased interest rate discouraged borrowing and spending, reducing the pressure on the cedi and contributing to its appreciation. This tighter monetary stance played a significant role in stabilizing the cedi and laying the foundation for its subsequent recovery.
Alongside monetary policy adjustments, the Ministry of Finance implemented fiscal consolidation measures to restore investor confidence. These initiatives, focused on fiscal discipline and prudent public finance management, signaled a commitment to macroeconomic stability, attracting foreign investment and bolstering the cedi. By restoring confidence in the Ghanaian economy, these measures helped to attract foreign investment and improve market sentiment, contributing to the strengthening of the cedi. The improved fiscal outlook reduced the risk premium associated with investing in Ghana, further supporting the currency’s appreciation.
Another significant driver of the cedi’s recovery is the robust inflow of foreign exchange and the accumulation of foreign reserves. This has been achieved through aggressive gold export strategies implemented by the Precious Minerals Marketing Company (PMMC) and the Gold Board. Increased exports of gold, along with enhanced foreign exchange inflows from cocoa and remittances, have significantly boosted Ghana’s foreign reserves, providing a buffer against external shocks and supporting the cedi’s value. These increased foreign exchange earnings have strengthened the cedi’s position in the foreign exchange market and enhanced its ability to withstand external pressures.
The NDC further highlights the favorable external environment, particularly the weakening of the US dollar amid global uncertainties, as an additional factor supporting the cedi’s appreciation. This external development has provided further tailwinds for the Ghanaian currency, contributing to its overall positive performance. The weakening dollar reduced the relative attractiveness of dollar-denominated assets, further supporting the demand for the cedi.
The NDC maintains that the cedi’s resurgence is a testament to the effectiveness of its economic recovery agenda and the fiscal and monetary prudence of the Mahama administration. While acknowledging the contribution of external factors, the NDC emphasizes the importance of its policy interventions in stabilizing the economy and restoring confidence among investors. The combined impact of these factors has led to a significant improvement in the cedi’s performance and the overall macroeconomic outlook for Ghana.
The cedi’s appreciation has injected optimism into the Ghanaian economy, providing relief to importers and signaling broader macroeconomic stability. While some economists remain cautious, monitoring inflation trends and potential external shocks, the NDC emphasizes the significance of these gains as indicators of the effectiveness of its economic policies. The strengthening cedi has reduced the cost of imported goods, providing relief to consumers and businesses. This positive development has also fostered a more stable economic environment, encouraging investment and supporting economic growth.
