In a surprising turn on Ghana’s currency front, the cedi has strengthened sharply against the US dollar, appreciating to an average of ₵11.89 on the i
In a surprising turn on Ghana’s currency front, the cedi has strengthened sharply against the US dollar, appreciating to an average of ₵11.89 on the interbank market as of Tuesday, October 14, 2025.
The gain follows the Bank of Ghana’s (BoG) latest $1.15 billion injection into the foreign exchange market — a move that has eased pressure on the local currency but drawn cautious reactions from the International Monetary Fund (IMF) and World Bank.
According to the BoG’s official daily exchange rates, the dollar traded at ₵11.8941 for buying and ₵11.9060 for selling on the interbank market.
However, the black-market rate remained higher, ranging between ₵13 and ₵14 per dollar, reflecting a still-tight foreign exchange supply situation.
Despite the marginal interbank recovery, the dollar remains scarce across major forex bureaus, with many traders citing limited inflows and increased speculative activity.
Background and Context
The latest move by the BoG marks part of a series of aggressive interventions designed to stabilise the cedi, which had come under severe depreciation pressure few weeks now.
Since January 2025, the Bank has injected an estimated total of $4.55 billion into the forex market — including $1.4 billion in the first quarter and over $2 billion in the second quarter.
The government has attributed the recent volatility to increased import demand, speculative currency trading, and weaker export performance, particularly from cocoa and gold — Ghana’s main foreign exchange earners.
However, critics argue that the central bank’s repeated injections amount to short-term fixes that risk undermining long-term macroeconomic stability.
IMF and World Bank Pushback
Both the IMF and the World Bank have voiced strong reservations about Ghana’s forex management strategy, warning that excessive market intervention could distort exchange rate dynamics and weaken investor confidence.
The IMF, which is overseeing Ghana’s Extended Credit Facility (ECF) programme, has consistently urged the BoG to allow the cedi to find its natural market level, guided by demand and supply.
A senior economist at the IMF was quoted as saying that “artificially supporting the currency through frequent dollar injections delays necessary fiscal and structural reforms.”
The World Bank has also expressed concern that Ghana’s actions may erode transparency in monetary policy, creating uncertainty for investors and development partners.
Reserves Under Strain
While the cedi’s recent appreciation offers short-term relief, the sustainability of BoG’s strategy remains in question.
The central bank’s latest data indicate that Ghana’s gross international reserves fell from $11.1 billion in June 2025 to $10.7 billion by September — the first decline in over a year.
The drop also reduced the country’s import cover from 4.8 months to 4.5 months, signalling declining buffer capacity to absorb external shocks such as oil price fluctuations or export shortfalls.
Economists attribute the fall largely to the cost of maintaining currency stability through direct market interventions.
A policy paper by the Institute for Policy Studies (IPS-Ghana) warned that “the BoG’s approach, though well-intentioned, could drain reserves faster than they are replenished, putting Ghana’s financial stability at risk.”
Policy and Economic Implications
Analysts believe the central bank’s dilemma reflects a broader policy conflict between maintaining short-term currency stability and ensuring long-term reserve adequacy.
The IMF’s ECF framework encourages flexible exchange rate management as part of its macroeconomic reform agenda, but Ghana’s heavy-handed interventions suggest growing domestic pressure to prevent further depreciation.
Economists caution that if the interventions continue unchecked, Ghana may face renewed currency weakness and a loss of confidence among investors and credit rating agencies.
Recommendations for a Balanced Path
In a recent advisory, IPS-Ghana urged the government to rebalance its forex policy through three main strategies:
1. Prioritize Reserve Accumulation:
Ghana must safeguard its international reserves to maintain credibility and resilience against global market shocks. Strong reserves enhance investor confidence and macroeconomic stability.
2. Pursue Structural and Fiscal Reforms:
The BoG’s interventions should be paired with reforms that expand productive exports, improve revenue mobilisation, and limit fiscal deficits — ensuring that forex inflows are sustainable.
3. Ensure Transparency and Policy Coordination:
The central bank must maintain clear communication and policy alignment with international partners, including the IMF and World Bank, to avoid policy contradictions and restore market trust.
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