BY Issah Olegor
The cedi has begun to feel the weight of heightened seasonal pressures, slipping steadily over the past two weeks as demand for foreign currency rises ahead of the Christmas and New Year trading period.
The latest depreciation marks a familiar cyclical pattern that has troubled the currency during peak import seasons for more than a decade.
Historically, the cedi has struggled during the last quarter of each year.
Importers’ demand for dollars for restocking, coupled with reduced foreign exchange inflows, typically exerts pressure on the local currency. Despite the injection of over $5billion within the year, the national currency is still finding it difficult to find its levels.
In previous years—such as 2014, 2019 and 2022—similar fourth-quarter pressures triggered sharp depreciation episodes.
Although the John Mahama administration, like its predecessors, has implemented several stabilisation measures, including forward FX auctions and IMF-supported reforms, the seasonal vulnerabilities persist.
Over the last fortnight, the cedi has slipped modestly on the interbank market.
The US dollar–cedi pair closed at a mid-rate of GH¢11.41, rising from GH¢11.12. The pressure extended to other major currencies, with the cedi weakening by 4.62% against the British pound to close at GH¢15.26, and by 3.87% against the euro, ending the period at GH¢13.32.
The retail market—where ordinary consumers and businesses feel the impact more directly—also recorded notable depreciation.
The cedi dipped 0.41% to sell at GH¢12.05 to the dollar, while sliding to GH¢15.90 against the pound and GH¢13.95 to the euro.
According to Databank Research, the movement of the cedi is broadly consistent with expectations for this time of year.
The firm notes that limited foreign exchange support from the Bank of Ghana (BoG) and elevated seasonal demand are the main drivers behind the recent weakness.
However, unlike previous years when sharp volatility triggered panic, analysts say the current fluctuations remain relatively contained.
“Despite the seasonal pressures, volatility remained comparatively moderate due to robust FX supply and timely spot interventions,” Databank indicated.
It projects a near-term stabilisation of the dollar–cedi rate within a retail market band of GH¢11.67 to GH¢12.15.
A key factor moderating potential speculation is the Bank of Ghana’s revised single-currency Net Open Position limits for banks, now tightened to between 0% and -10%.
This policy restricts banks from holding long FX positions, effectively preventing hoarding and easing artificial pressure on the cedi.
Additionally, expectations of an upcoming IMF disbursement are helping to cool bearish market sentiments.
Despite these measures, the new week opened with the cedi trading at GH¢12.20 on the retail market—one of its weakest levels in months.
Still, on a year-to-date basis, the currency has gained 27.78% since January 1, 2025, reflecting relative improvements driven by disciplined monetary policy, ongoing fiscal consolidation, and the IMF-backed recovery programme.
Market watchers, however, caution that the cedi’s outlook remains sensitive to external shocks, import-driven demand, and the pace of government reforms.
