Ghana’s cedi, once hailed as the world’s best-performing currency, has stumbled as a surge in import-driven demand for dollars erodes its earlier gains.
Data from Bloomberg shows the cedi weakened by 13% this quarter, the steepest drop globally, reversing part of the currency’s 50% appreciation earlier this year on the back of strong gold prices.
Analysts say the year-end surge in imports from food to machinery is driving up dollar demand as businesses stockpile goods ahead of the Christmas season.
Hamza Adam, Head of Market-Risk Management at UMB Bank, said the Bank of Ghana (BoG) has been unable to fully meet banks’ foreign exchange requests on behalf of clients.
“As at last week, banks that filed dollar needs … got about half of their requests. This week the central bank is trying to meet all demand,” he explained.
By early Friday, the cedi traded 0.1% weaker at GH¢11.95 per dollar. Still, on a year-to-date basis, the currency has gained 23%, reflecting some resilience.
Ghana’s gross international reserves climbed to a three-year high of $11.1 billion at the end of June. But the BoG has been reluctant to deploy reserves aggressively, instead prioritising stability over short-term shocks.
In an emailed response, the central bank said:
“Our role is to ensure fluctuations remain orderly, reflect fundamentals, and do not undermine confidence in the broader economy.”
However, Ghana’s import dependence leaves the cedi vulnerable to seasonal dollar surges, and export earnings from gold and cocoa support the currency but are often offset by heavy import bills.
While investors welcomed the cedi’s strong rally earlier this year, sustained volatility risks eroding business confidence and raising inflationary pressures.
With the festive season approaching, businesses are watching closely to see if the BoG can strike a balance between stabilising the currency and safeguarding its reserves.
