…this is the second part of a previous article under the title ‘why currencies have different values — understanding the Cedi’
By Ahmed (Watara) TAHIRU & Eric TETTEH
After years of gradual decline and a sharp crash in 2022, Ghana’s cedi is finally showing signs of stability and even strength.
In Part 1 of this series, we explored the drivers behind the cedi’s historic plunge. In this second part, we focus on the currency’s recent recovery, what’s fueling the rebound, and what these shifts mean for households, businesses, and the broader economy.
A brutal slide followed by a promising rebound
In 2022, Ghana’s cedi suffered one of the worst depreciations in the world. According to the U.S. Department of Commerce, the cedi lost more than 55percent of its value against the U.S. dollar between January and October of that year.
By late 2022, the cedi was worth barely a third of its prior value, driving up import costs, triggering inflation, and shaking business and investor confidence.
This rapid fall was fueled by multiple factors: inflation topping 30percent, soaring import bills, and fiscal stress from high government debt. As Ghana imports most of its fuel, machinery, and consumer goods, the weakening cedi sharply increased the cost of living.
Demand for foreign exchange surged while confidence in the local currency dwindled. But beginning in late 2023 and strengthening into 2025, the cedi began to recover. Ghana’s debt restructuring efforts, paired with a US$3 billion IMF-supported program, reassured international markets. High global prices for gold, oil, and cocoa, Ghana’s key exports—further boosted foreign currency inflows.
By early 2025, the cedi had appreciated approximately 50percent relative to its lowest point. It traded around GH¢10–GH¢13 per U.S. dollar, a stark improvement from GH¢15–GH¢16 in early 2024.
As of May 2025, the cedi hovered around GH¢10.28 per USD. According to the Business and Financial Times, this recovery is supported by “strengthening fundamentals, particularly in gold and oil exports.” Ghana’s Finance Minister has credited “sound economic planning” for the turnaround, emphasizing that it is “not a nine-day wonder.”
Exchange rate movements – Why they matter so much
The strength or weakness of the cedi carries direct and wide-ranging implications for Ghana’s economy:
- Households and individuals – Squeezed or relieved
When the cedi weakens, imported goods such as fuel, electronics, and medicines become more expensive in terms of cedi. This squeezes household budgets and accelerates inflation. Families may cut back or shift to locally sourced alternatives.
Conversely, when the cedi strengthens, the cost of these goods tends to fall, easing inflation and relieving some pressure on household incomes. Foreign travel and overseas education also become more affordable. For the Ghanaian diaspora, however, a stronger cedi means each dollar of remittance converts into fewer cedis for loved ones back home.
- Entrepreneurs and investors – Margins and confidence on the line
Businesses, especially those reliant on imports, closely watch exchange rate movements. A weaker cedi inflates costs for raw materials, machinery, or intermediate goods. This can erode profit margins or force companies to raise prices.
Exporters, on the other hand, such as cocoa, gold, and cashew producers may benefit from a weaker cedi, earning more in local currency for each dollar or euro in revenue. However, that comes with increased costs for imported inputs and servicing foreign loans.
Smart entrepreneurs monitor exchange rate trends, adjust pricing strategies, and where possible use hedging tools such as forward contracts to lock in currency values. Meanwhile, investors view exchange rate stability as a proxy for economic resilience. A stable or appreciative cedi boosts investor confidence and attracts longer-term capital.
- Banks and corporates – Managing currency risk
Banks and large firms typically operate in both the cedi and foreign currency. A sudden cedi drop can trigger credit defaults especially if borrowers earn revenue in cedi but owe debt in dollars.
For banks, this raises credit risk and can constrain lending. For companies with foreign-denominated debt, cedi depreciation inflates their liabilities. On the flip side, a stronger cedi lowers the cedi-equivalent cost of dollar loans and imported inputs, improving balance sheets.
To manage risk, firms often match revenues and expenses in the same currency, hold foreign exchange reserves, or adjust loan structures. Central bank actions such as tightening or loosening interest rates also influence liquidity and hedging strategies in the financial sector.
- Government – The balancing act between stability and growth
Fiscal and monetary policy remain central to cedi stability. High budget deficits and rising debt fuel inflation and reduce confidence in the currency. Prudent fiscal management through reduced deficits, efficient tax systems, and focused spending is crucial.
In Ghana’s case, the government has emphasized inflation control, reduced subsidies, and sought external financing on better terms. The Bank of Ghana, for its part, has raised interest rates to curb inflation and protect the cedi.
As of 2025, tighter monetary policy has helped stabilize prices and attract foreign capital. The government’s broader challenge is to build foreign exchange reserves, support value-added exports (especially in agriculture and mining), and maintain a steady reform agenda. These actions are essential to sustaining the recent gains in the currency’s value.
Conclusion – Is this the start of long-term stability?
Ghana’s recent cedi appreciation is a welcome sign for businesses, investors, and consumers alike. But lasting stability depends on more than on temporary export gains or external aid. It requires fiscal discipline, monetary credibility, and productive investment in local industries.
As Ghana continues to implement reforms under the IMF-supported program and benefits from strong export revenues, the next few quarters will be critical. Policymakers, firms, and households alike must remain proactive and strategic in managing currency-related risks and opportunities.
>>>Ahmed Tahiru is a dedicated financial literacy advocate and aspiring entrepreneur with a mission to empower individuals through knowledge. With a deep passion for helping others unlock their financial potential, he believes that financial education is key to personal and community growth. Outside of his advocacy work, Ahmed is an avid reader and writer, constantly learning and sharing insights. Guided by the philosophy, “Your attitude, not your aptitude will determine your altitude,” he focuses on fostering a positive mindset for success in all endeavours. He can be reached via +233 543 460 166 and or [email protected] and or https://www.linkedin.com/in/ahmed-tahiru
>>>Eric Tetteh is a finance professional with experience in investment analysis, fund management, and financial research. He is the founder of Finsage Analytics, a platform dedicated to training aspiring finance professionals in financial performance analysis. Eric works in asset management space, conducting market research and equity analysis to support investment decisions. He is also passionate about career development and founded CareerStreet, a mentorship and professional development initiative that bridges the gap between academia and industry. Eric holds a strong interest in corporate finance, investment banking, and economic research. He can be reached via [email protected] and or +233 554 679 394
