As the Cedi Continues To Fall, Expert Predicts the Rate It Will Reach by Year-End
- The cedi’s strength waned recently, with expert Samuel Asiamah linking it to policy support, reserve buffers, and short-term inflows
- The cedi could trade between GH¢10 and GH¢13 per USD by December 2025, according to Asiamah, depending on reserves, fiscal discipline, and dollar demand
- The cedi’s weakness will raise import costs, fuel inflation, tighten household budgets, and increase credit risks for businesses, Asiamah explained
The Ghana cedi has been depreciating over the past few weeks.
The dollar, which saw significant and rapid depreciation last year, 2024, started to appreciate significantly in mid-January, moving from GH¢17 to GH¢10 and some pesewas day by day.
Source: Twitter
The nexus between the dollar and the cedi has been something Ghanaians are very attentive to and interested in, as it affects the economy and contributes to inflation and deflation in the market as far as exchange rates are concerned.
The new NDC government has been applauded and lauded by Ghanaians for how the cedi has been performing since they came into office.
President John Mahama, in June, reacted to the recent appreciation of the cedi, commending businesses, especially transport services, that have reduced prices to reflect the currency's movement. He also urged others to pass on some of the benefits to ordinary Ghanaians.
According to the president, the cedi appreciation is not the outcome of a single government policy but a product of effective leadership, fiscal discipline, and sound economic management that has raised confidence in the economy.
Mahama also explained that the cedi’s “true value” is not extremely low like GH¢3, but should fairly be between GH¢10 and GH¢12 per dollar.
In Mahama’s viewpoint, this range gives a balance between making imports affordable and keeping local exporters competitive, avoiding the dilemma where foreign goods overwhelm local industries.
He further stated that the cedi’s stronger position has already produced tangible benefits, such as reducing Ghana’s public debt by over one hundred and fifty billion cedis in just a few months.
The recovery, he noted, is being supported by rising foreign exchange inflows, stronger international reserves, and deliberate efforts at fiscal consolidation.
The recent exchange rates the Cedi has traded against the dollar, which have seen the greenback appreciating slightly against the local currency, have raised concerns about whether the Cedi is depreciating to its usual spot of seventeen cedis.
The average Ghanaian is expecting the cedi not to depreciate like it did in previous years, hoping it will become stable.
In the recent rates updated by the Bank of Ghana (BoG), the dollar was selling for GH¢11.2556.
Expert explains causes of recent cedi fall
Source: TikTok
The recent depreciation of the cedi prompted YEN.com.gh to contact an expert, Samuel Asiamah, who regularly educates his large following on economic matters.
We asked him about the possible reasons why the dollar has strengthened against the cedi in recent weeks.
Samuel Asiamah pointed out the loopholes that have caused this abrupt and rapid depreciation, which has sparked public concern. Many believe the cedi will continue to depreciate, and by the end of the year, the situation could become even worse.
Drawing on his expertise, Asiamah broke down the possible causes and provided detailed insights into the issue.
Here are the insights Samuel Asiamah shared on the alarming fall of the cedi:
Drivers of the cedi’s rise and fall
Large Bank of Ghana dollar sales produced a quick appreciation. The central bank then scaled back the size and frequency of those sales. That pullback let market pressures reassert, so the cedi weakened.
Strong corporate dollar demand met a narrow supply. That widened the gap between interbank and retail rates.
Positive policy signals and an IMF review boosted inflows and sentiment during the appreciation phase.
Sustainability of the cedi’s current strength
When asked about the primary factors influencing the recent appreciation and sudden depreciation of the cedi against the dollar, Asiamah said:
"The strength is fragile. It rests on policy support, short-term inflows, and reserve buffers. Reserves rose in recent months, which helps buffer shocks, but the buffer remains limited versus import needs."
"Inflation has moved down toward the low teens, which helps real exchange stability, but fiscal gaps and external pressures remain the main risks. Bank of Ghana interventions, manipulation, and what follow-up effects readers should expect."
"Intervention to smooth volatility is a standard central bank tool. Labelling it manipulation requires legal and intent proof, not economic judgment."
Short-term effects: calmer markets, improved sentiment
When asked about the sustainability of the cedi's current strength, considering Ghana's broader fiscal and economic situation, he stated:
"Long-term risk: Reserve drawdown, delayed market adjustment, and moral hazard where players postpone needed hedges. Repeated use also fosters multiple exchange rates and market fragmentation."
Expected cedi rate by year-end 2025
When asked whether the interventions by the Bank of Ghana can be classified as manipulation, and what the short and long-term implications are, he made three simple scenarios with clear drivers, which are:
- Baseline: GH¢11.0 to GH¢12.0 per USD. Drivers: modest reserve support, steady corporate demand, and continued IMF program.
- Stronger outcome: GH¢10.0 to GH¢11.0 per USD if commodity receipts rise and foreign inflows accelerate.
- Weaker outcome: GH¢12.0 to GH¢13.0 per USD if fiscal slippage returns, the central bank cuts intervention further, or dollar demand from firms spikes. Current intra-market prints are around GH¢10.7–10.9 per USD, so small moves will shift market tone quickly.
How cedi volatility impacts inflation and trade
Samuel Asiamah, explaining the cedi's volatility impact on inflation, import/export dynamics, and the everyday lives of Ghanaians in the next quarter, explained:
Inflation: A weaker cedi pushes import prices higher. That slows the recent downward path in CPI and raises food and fuel costs for households.
Trade: Importers face higher input costs and squeezed margins. Exporters get more local currency per dollar, but export gains depend on production capacity and logistics.
Households: Higher retail prices, tighter purchasing power, and larger fuel and utility bills.
Businesses: tighter working capital, higher costs for imported machinery and spare parts.
Financial sector: More currency mismatches and credit risks for firms with foreign-currency debt.
Cedi crosses GH¢11 as dollar demand surges
The Ghana cedi has crossed GH¢11 to the US dollar, with banks quoting up to GH¢11.30 and forex bureaus around GH¢12.20. The Bank of Ghana’s official rate stands at GH¢10.90.
Pressure on the cedi comes from strong dollar demand and reduced central bank supply, as auctions fell short of market needs. Businesses are also buying ahead of Christmas imports.
The cedi has long struggled against the dollar, nearly doubling in value between 2020 and 2023. Its 2025 appreciation brought relief, but concerns about sustainability remain.
Proofreading by Samuel Gitonga, copy editor at YEN.com.gh.
Source: YEN.com.gh
