The Ghana cedi has depreciated by 8.89% against the US dollar from January to date. This decline is due to foreign exchange demand consistently exceeding market supply.
This renewed pressure follows a brief appreciation in June, which saw the cedi gain 3.30% against the US dollar. The June appreciation was largely due to significant support from the Bank of Ghana, which injected GHS 2.01 billion into the foreign exchange market. However, the current situation indicates that underlying demand for dollars remains strong.
The persistent demand for foreign exchange is largely attributed to energy sector players. These businesses require dollars to finance crude oil imports, finished petroleum products, and payments to power producers. Some market participants also point to an overall inadequate dollar supply to meet the broad needs of businesses across various sectors.
JOYBUSINESS data from major commercial banks shows sustained pressure on the cedi over the past two weeks. Businesses are seeking more dollars than the market can provide. This imbalance is causing concern among investors, with some taking positions to protect their investments.
The Bank of Ghana increased its weekly foreign exchange auction to GHS 220 million last week. Despite this, demand remained stronger than supply, with about GHS 201 million in bids left unmet. The cedi depreciated by 0.60% during the week, pushing its month-to-date depreciation to 1.86%.
The Bank of Ghana maintains that the recent pressure is temporary market movement. Officials insist the central bank remains in a strong position to support the market. They aim to ensure critical imports are not affected.
Ghana's international reserves have crossed GHS 14 billion, according to recent Bank of Ghana data. The central bank expects improved foreign exchange inflows in the coming months. These include stronger remittance flows and support from development partners.
The Bank of Ghana anticipates inflows from the International Monetary Fund (IMF) programme. This includes about GHS 380 million in programme support and a further GHS 240 million expected in July 2026. These funds are expected to strengthen reserves.
The central bank is also optimistic about improved investor confidence. This follows Ghana’s Fitch upgrade and the government’s early Eurobond repayment decision. These factors could support the economy.
However, the Bank of Ghana warns that risks remain. Uncertainties surrounding the Middle East peace process could affect global crude oil prices. This could further increase dollar demand. The Bank of Ghana will continue to monitor developments and introduce measures to maintain stability in the foreign exchange market.