The Bank of Ghana (BoG) has confirmed that the weakening of the U.S. dollar during 2025 contributed to the significant stability and strengthening of the Ghana cedi, although some commentators had earlier downplayed its impact.
The BoG’s latest Monetary Policy Report for September 2025 indicated that the U.S. dollar index fell by about 8 percent between January and August 2025. This decline was largely driven by America’s weakening labour market and growing expectations of interest rate cuts by the U.S. Federal Reserve.
The report noted that job creation in the U.S. had slowed sharply to just 22,000 new jobs by August, pushing unemployment to 4.3 percent. This was the highest in over two years. With markets anticipating a 25 to 50 basis point rate cut in September and further easing into 2026, investors have been shifting away from the dollar, triggering its depreciation.
The weaker dollar, the Central Bank report explained, provided some relief to currencies of emerging markets and developing economies (EMDEs), including Ghana’s cedi, which had endured heavy depreciation pressures in previous years.
This does not downplay the impact of the improved forex reserves as a result of the significant increase in gold prices; it indicates that a weaker dollar also contributed to the rise of the cedi.
“The U.S. dollar index has weakened by about 8 percent from January to August 2025, driven partly by the weak labour market and anticipated Federal Reserve rate cuts. As of August 2025, U.S. job creation slowed to just 22,000 new jobs, with unemployment rising to 4.3 percent. The softening of the labour market in the U.S. had the markets pricing in a 25–50 basis point Fed rate cut in September, with more easing expected into 2026. A growing number of countries are settling oil, commodities, and trade in currencies other than the U.S. dollar, including the Chinese yuan,” the report explained.
The bank further concluded that, “The weakness of the dollar provided some support to EMDEs currencies in the review period.”
When the U.S. dollar loses value, it often eases pressure on smaller currencies like the cedi because international trade and debts priced in dollars become relatively cheaper.
This dynamic, according to the central bank, played a quiet but meaningful role in helping the cedi stay relatively firm during parts of 2025.
However, not everyone agrees that the dollar’s slump is the main reason behind the cedi’s improved performance. Some local commentators argue that domestic factors such as increased foreign exchange inflows from gold, tighter monetary policies, and improved fiscal management had a stronger impact than global currency movements.
But the official information from the Bank of Ghana confirms that a dip in the US dollar played an integral role in the relief the economy is enjoying today.
