The Ghanaian cedi may have earned the title of the world’s best-performing currency in 2025, according to Bloomberg data, but analysts caution that this is not a time for celebration.
Despite the seeming strength, the appreciation is viewed more as a recovery than a sign of long-term currency stability or economic strength.
This year’s currency rebound, where the cedi appreciated by over 25 percent against the U.S. dollar, …CONTINUE READING stands in stark contrast to its 2022 crisis, when it lost more than 55 percent of its value amid soaring inflation, rising debt, and fiscal mismanagement.
Fitch Ratings has since upgraded Ghana’s foreign-currency issuer rating from ‘Restricted Default’ to ‘B-’, pointing to improved investor confidence.
Yet, financial experts stress that a strong currency, especially in developing economies, is not necessarily cause for celebration.
Johnson Chukwu, group managing director/CEO of Cowry Asset Management, believes the cedi’s appreciation reflects a rebound from past depreciation. “What we are currently seeing is a form of recovery. However, it’s important to understand this is not necessarily a sign of sustained strength,” he said. “Over the last four or five years, the cedi has performed better than some other African currencies, but this must be seen in context.”
He emphasised that Ghana’s currency strength is a correction, not a turnaround. “The cedi has not appreciated to the extent that it negatively impacts exports. In fact, it hasn’t reached a point where its strength becomes a challenge to export competitiveness,” he added.
Ghana’s macroeconomic gains have been supported by policy reforms under a $3 billion IMF Extended Credit Facility, as well as improved foreign exchange inflows from high global prices of gold and oil.
According to Marvellous Adiele, portfolio manager at Parthian Capital, “Ghana’s external reserves have steadily grown, supported by increased gold and oil export earnings. Domestic policies mandating cedi-based gold purchases have further enhanced foreign currency supply and helped ease exchange rate pressures.”
Despite this, the recent dollar shortage in Ghana’s banking system is putting pressure on the exchange rate again. The cedi, which reached around GH¢10.28 per dollar by May 2025, has come under stress from surging demand for U.S. dollars and declining liquidity, undermining recent gains and reminding investors of the volatility that lingers.
-Businessday
