In a dramatic reversal of fortunes, the Ghanaian cedi has surged nearly 50% against the US dollar in 2025, making it the strongest-performing currency globally this year. Starting the year trading at around ₵15 to the dollar, the cedi has now appreciated to just over ₵10 per dollar, catching investors and markets by surprise. On Monday alone, the cedi opened at ₵10.21/$, gaining 7% from Friday’s close of ₵10.25/$, according to Bloomberg data.

This resurgence is a significant contrast to 2022, when the cedi was the worst-performing currency worldwide, having lost more than 55% of its value amid soaring inflation, heavy debt burdens, and capital flight. Now, Ghana appears to be on a solid path to recovery, driven by strong commodity exports, bold monetary policy, and a successful IMF-backed reform program.

Cedi Strength Reflects Renewed Economic Confidence

Investors have responded positively to Ghana’s efforts to restore macroeconomic stability following its 2022 debt default and subsequent financial turmoil. The cedi’s consistent appreciation reflects rising foreign investor confidence, particularly as Ghana’s fundamentals—such as trade balance, reserves, and inflation control—improve.

Though the rally has taken some by surprise, the Bank of Ghana (BoG) has warned against complacency. BoG Governor Johnson Asiama noted, “Stability doesn’t mean fixation,” emphasizing the delicate balance between a strong currency and maintaining Ghana’s export competitiveness.

Bank of Ghana Tightens Policy to Reinforce Currency Stability

The cedi’s rally has been underpinned by a hawkish monetary stance from the Bank of Ghana. The central bank raised its benchmark policy interest rate to 28% in March 2025, an unexpected 100-basis-point hike designed to combat inflation and attract foreign capital. This move sent a strong signal to markets about the BoG’s commitment to currency stability.

Additionally, the BoG has shifted from speculative flow-based forex controls to spot-market auctions, a strategic transition that has enhanced the transparency and availability of US dollars for businesses and importers. This has helped reduce the speculative hoarding of dollars and eased pressure on the currency.

Inflation Drops, but Caution Remains

Inflation, which hit crisis levels during the 2022 economic meltdown, has now significantly dropped to 21.2% as of April 2025. Though still above the BoG’s 6–10% target range, the downward trend is encouraging. Nonetheless, rising utility costs and lingering inflation risks have prompted the central bank to delay any near-term monetary easing, which could risk reigniting inflation or reversing the cedi’s hard-earned gains.

Gold and Cocoa Exports Drive Foreign Exchange Inflows

A cornerstone of Ghana’s recovery has been the resurgence in commodity exports, particularly gold and cocoa. Gold prices have risen sharply—from around $2,000 per ounce in 2024 to $3,400 in May 2025—substantially increasing Ghana’s export revenue.

In 2024 alone, gold export earnings jumped from $7.6 billion to $11.6 billion, bolstered by the government’s Gold Board initiative, which mandates that local gold purchases be settled in cedis before export. This policy has not only strengthened the local currency but also increased Ghana’s gold reserves from 9 tons to 31 tons since late 2023.

Ghana’s emergence as the sixth-largest gold producer globally has provided a significant buffer against external shocks, and the benefits are reflected in the country’s record-high foreign exchange reserves, which reached $11.4 billion in March 2025.

Alongside gold, strong performances from oil exports and non-traditional exports contributed to a trade surplus of $4.3 billion in 2024, another record figure that helped reinforce the cedi.

IMF Support Anchors Economic Reforms

Ghana’s economic rebound is also being supported by a three-year, $3 billion IMF program initiated in the aftermath of the 2022 debt crisis. The IMF-backed program includes key structural reforms aimed at restoring fiscal discipline, stabilizing the currency, and returning to demand-driven economic policies.

Among the more painful—but effective—measures has been the suspension of ₵65 billion in arrears payments, which had previously added strain to the public finances. In addition, Treasury bill yields were slashed from 28% to 15%, lowering the government’s debt servicing burden and contributing to greater long-term fiscal sustainability.

Political Stability Boosts Market Sentiment

Investors have also drawn confidence from Ghana’s relative political calm and the market-oriented reforms championed by President John Mahama. These reforms have focused on rebuilding international trust, improving governance in key sectors, and ensuring transparency in public finance—all of which have helped stabilize investor expectations and sentiment.

Risks on the Horizon: Inflation and Premature Easing

Despite the strong currency performance, economists warn that the path ahead still requires caution. Ghana’s inflation rate, while falling, remains outside the BoG’s preferred range. Furthermore, the government faces pressure to resist early monetary loosening, which could undermine the cedi’s gains and possibly invite speculative attacks or trigger renewed capital flight.

Persistent inflationary risks, such as higher electricity and fuel costs, could also reduce the effectiveness of the BoG’s current tight monetary stance if not addressed through broader fiscal reforms.

Outlook: Sustained Gains or Temporary Rally?

The cedi’s extraordinary performance in 2025 marks a turning point in Ghana’s economic recovery, but analysts remain divided on whether the gains are sustainable or merely reflect short-term momentum.

Much will depend on Ghana’s ability to:

• Maintain tight monetary policy without stifling growth;

• Continue attracting foreign investment;

• Implement long-term structural reforms under the IMF’s guidance;

• And avoid new fiscal pressures that could undermine macroeconomic stability.

So far, the data looks promising. But as Governor Asiama noted, currency management must remain dynamic to adapt to evolving global and domestic conditions.

Conclusion: A Remarkable Rebound, But Vigilance is Key

Ghana’s cedi has achieved a rare feat in 2025—transitioning from the world’s worst-performing currency in 2022 to its best performer just three years later. This rebound reflects a coordinated policy response that combined monetary tightening, commodity windfalls, and IMF-backed reforms.

While challenges remain, Ghana’s experience offers a compelling case study in how sound fiscal and monetary governance—coupled with resource-driven revenues and international support—can turn a currency crisis into a recovery narrative. For investors and policymakers alike, the cedi’s rally stands as both a milestone and a cautionary tale: progress is possible, but only if discipline and vigilance continue.