BY Issah Olegor
The local currency has come under renewed pressure against the major international currencies despite significant foreign exchange interventions by the Bank of Ghana, raising fresh concerns about the sustainability of recent gains recorded by the cedi and the broader outlook for the foreign exchange market.
The latest market data show that the cedi weakened across both the interbank and retail foreign exchange markets during the past two weeks, driven largely by rising demand for foreign currency amid increasing import costs and heightened corporate demand for dollars.
In the interbank market, the cedi depreciated against all three major trading currencies. The cost of acquiring one US dollar increased to GH¢11.85 from GH¢11.63 recorded during the previous review period. Similarly, the British pound strengthened to GH¢15.85 from GH¢15.62, while the euro appreciated to GH¢13.66 from GH¢13.49.
The depreciation was equally evident on the retail market where businesses and individuals source foreign currency for transactions. By the close of the review period, the cedi had lost 0.81 percent against the US dollar, 1.83 percent against the British pound and 1.40 percent against the euro. Retail market rates closed at approximately GH¢12.30 to the dollar, GH¢16.35 to the pound and GH¢14.30 to the euro.
The latest decline marks a continuation of the currency’s recent adjustment after months of strong performance. Month-on-month data indicate that the cedi depreciated by an average of 4.18 percent between April and May 2026, exceeding the 3.23 percent depreciation recorded at the end of April.
This represents a worsening trend despite aggressive efforts by the central bank to stabilize the foreign exchange market.
The development comes even after the Bank of Ghana injected approximately US$1.1 billion into the market in May 2026 to support foreign exchange liquidity and help moderate exchange rate pressures. The intervention forms part of a broader strategy adopted by the central bank to maintain stability in the currency market while preserving confidence among investors and businesses.
The renewed weakness of the cedi contrasts sharply with the strong performance recorded in 2025 when the local currency emerged as one of the world’s best-performing currencies.
During that period, the cedi appreciated significantly against the US dollar, supported by strong gold export earnings, increased foreign exchange reserves, tight monetary policy, improved fiscal discipline and substantial interventions by the central bank.
Bank of Ghana Governor Dr. Johnson Pandit Asiama has repeatedly maintained that exchange rate stability remains a key pillar of the country’s macroeconomic recovery programme.
Since assuming office, he has consistently emphasized the importance of building strong reserve buffers to support the currency while implementing reforms in the foreign exchange market.
Speaking at several policy engagements this year, Dr. Asiama acknowledged that exchange rates naturally respond to market conditions under Ghana’s managed floating exchange rate regime.
He stressed that while the central bank aims to reduce excessive volatility, it does not seek to maintain a fixed exchange rate target.
Economic analysts believe the latest depreciation reflects a combination of global and domestic factors.
According to Databank Research, market sentiment remains largely bearish as moderate foreign exchange supply struggles to keep pace with rising demand pressures.
The research firm explained that one of the key drivers has been the increasing demand for dollars by importers and corporate entities, particularly as global central banks liquidate non-dollar assets to finance higher import bills resulting from elevated refined crude oil prices.
The recent escalation in global energy costs, partly linked to geopolitical tensions and instability in the Middle East, has increased the demand for foreign exchange across emerging economies, including Ghana.
Higher fuel import bills have placed additional pressure on foreign exchange markets, forcing businesses to seek more dollars to finance international trade obligations.
Databank Research noted that the cedi’s depreciation remains broadly in line with market expectations. However, analysts caution that additional pressures could emerge in the coming weeks as multinational companies enter the second-quarter dividend and profit repatriation season.
Traditionally, the second quarter of the year sees heightened demand for foreign exchange as multinational firms transfer profits and dividends to their parent companies abroad.
This seasonal demand often exerts pressure on the local currency and can trigger temporary depreciation if not adequately matched by foreign exchange inflows.
Despite these concerns, market observers believe speculation against the cedi could remain relatively contained following the Bank of Ghana’s announcement of a planned US$1.2 billion monthly foreign exchange support programme for June 2026. The intervention is expected to improve market liquidity and provide additional support for the local currency.
Nevertheless, Databank Research projects that the dollar-cedi exchange rate could weaken further beyond the current interbank rate of GH¢11.85 as corporate demand intensifies during the peak repatriation window.
The pressure was already evident at the start of the new trading week, with forex bureau operators quoting the dollar at approximately GH¢12.40. This suggests the cedi has already depreciated by about 1.05 percent against the US dollar since the close of the previous review period.
The latest currency movements come at a time when Ghana’s macroeconomic fundamentals remain relatively strong. Inflation has fallen sharply from over 23 percent at the end of 2024 to single digits, while gross international reserves have risen to more than US$14 billion.
Lending rates have also declined significantly following a series of monetary policy rate cuts by the Bank of Ghana.
However, economists warn that sustaining exchange rate stability in the face of rising import costs, global uncertainties and seasonal foreign exchange demand will require continued coordination between monetary policy, fiscal management and foreign exchange market interventions.
