The Ghana Cedi, which has been known for shedding part of its value annually for many years, staged an impressive rally in 2025. Known for its consistent annual depreciation, the cedi, for first time in many years recorded an impressive appreciation of about 32%.
The cedi’s rally in 2025 was not just shown in speeches, charts, and conversations; businesses and individuals attested that it indeed was real. It showed up at the forex bureau, at the port, and in the cost of imported goods that suddenly stopped rising at a frightening pace. The slowdown in the prices of goods and the reduction and stability at the pumps are all manifestations of the cedi’s appreciation.
After years of pain, the question many people are asking is what really changed and how much effect did these changes have on the cedi’s rally? To put it simply, how much did these changes contribute to the making of the cedi’s appreciation pie?
An analysis by CDD-Ghana Fellow and founder of The National Blue Ocean Strategy Initiative (NBOSI) Dr. Hene Aku Kwapong offers a clear and grounded answer. Instead of the vague political responses and credits, his breakdown treats the cedi’s gain like a pie, slicing it into the factors that actually mattered and showing how much each one contributed.
Domestic Policy Contributed the Biggest Slice – 46.6%
The CDD-Ghana Fellow’s analysis reveals that the chunk of the work on the cedi’s gain comes from home, not abroad. He says tight monetary policy did the heavy lifting
Nearly half of the cedi’s appreciation in 2025 came from domestic monetary policy. In plain terms, the Bank of Ghana made holding dollars less attractive and holding cedis more rewarding.
Early in the year, the central bank kept interest rates high and even raised them in March. For businesses, investors and banks, this changed the calculation. Parking money in cedi assets suddenly paid better than rushing into dollars “just in case.” At the same time, the Bank of Ghana tightened liquidity, meaning there were fewer excess cedis sloshing around the system chasing foreign currency.
This, he believes, was basic central banking, applied firmly and consistently. And it worked.
When people complain that high interest rates hurt borrowing, that concern is real. But in 2025, that tough stance also helped stabilize the currency that underpins prices, imports and confidence across the economy.
“The Bank of Ghana maintained a tight stance in the first half of the year, including a rate hike in March. High interest rate differentials mattered. So did aggressive liquidity management. These actions raised the opportunity cost of holding dollars and reduced excess cedi liquidity. This is not exotic economics. It is textbook central banking applied with unusual consistency,” he noted.
Weakening Dollar Contributes 28.8% to Cedi’s Gain
The second slice of the pie came from outside Ghana’s control. He confirms that in 2025, the US dollar weakened globally, with the Dollar Index falling by about 9.4 percent. That gave breathing space to many currencies around the world, including the cedi.
However, this factor explains less than a third of Ghana’s currency gain. If dollar weakness were the main reason, Ghana would have looked much like its peers. Instead, the cedi stood out.
In other words, the wind was blowing in everyone’s favour, but Ghana’s sail was set differently.
“The US Dollar Index weakened by about 9.4 percent in 2025, as shown in the global context discussion. That decline provided a tailwind for virtually all currencies, including the Cedi. But the visuals make clear that this explains less than a third of Ghana’s total appreciation. If global dollar weakness were the main story, Ghana would not stand out so sharply from its peers,” he explained.
Gold, the IMF, and Credibility Sealed the Gains with 24.5%
The final slice is a mixture of several factors. The factors are the impressive gold prices on the international market, the IMF programme, and the favourable credit ratings.
Dr. Aku Kwapong observes that the IMF disbursements after successful programme reviews strengthened Ghana’s reserves and sent a signal that policies were broadly on track. At the same time, high gold prices and increased export volumes under the Gold for Reserves programme brought more foreign exchange into the country.
These dollars did not just arrive; they stayed. These were not all; late in the year, a credit rating upgrade by S&P added another layer of reassurance. It did not start the cedi’s rally, but it helped keep it going by confirming what markets were already beginning to believe.
The CDD-Ghana Fellow recounted that, “IMF disbursements following successful program reviews boosted reserves and signaled policy credibility. Elevated gold prices, combined with increased export volumes under the Gold for Reserves program, increased foreign exchange supply. The late-year credit rating upgrade by S&P did not create the rally, but it helped sustain it by validating what markets were already pricing in.”
Why This Matters Beyond 2025
From Dr. Aku Kwapong’s analysis, the real lesson from the cedi’s 2025 rally is not that Ghana got lucky. It is that discipline mattered. He admits that external factors helped and commodity prices also helped.
But the largest driver was a deliberate policy choice to prioritise currency stability, even when it was uncomfortable.
This translated into a currency that stopped free-falling. For businesses, it meant better planning and fewer surprises. And for policymakers, it offers a reminder that while confidence is important, credibility is built through actions, not slogans.
It therefore important that policymakers hold strong the fort since it was the biggest contributor in order to sustain the gains to drive economic growth and development.
