Ghana’s cedi has extended its year-to-date depreciation to 10.11 percent, as sustained foreign exchange demand continues to outweigh supply despite expectations of fresh inflows from international partners.
The local currency weakened over the past two weeks, closing at interbank midrates of 11.63 to the US dollar, 15.62 to the British pound and 13.49 to the euro. This represents respective losses of 3.01 percent, 1.65 percent and 1.56 percent over the period, according to market data.
In the retail market, the cedi also came under pressure, depreciating 3.07 percent against the dollar, 1.56 percent against the pound and 1.49 percent against the euro. It closed at 12.20 to the dollar, 16.05 to the pound and 14.10 to the euro.
The latest depreciation means the currency has now moved beyond earlier expectations that had placed the dollar rate around the 11.40 level, underscoring the intensity of near-term demand conditions in the foreign exchange market.
Market participants attribute the weakness to a combination of import-related demand, corporate foreign exchange cover needs and seasonal liquidity pressures, which together have outweighed inflows into the banking system.
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Analysts say the demand side of the FX market has remained structurally firm, particularly from sectors reliant on imported inputs, while supply has been uneven, contributing to periodic pressure on the currency.
Attention is also focused on the Bank of Ghana’s cautious stance on foreign exchange intermediation in recent weeks, even as Ghana awaits an expected disbursement of about US$385 million from the International Monetary Fund under its ongoing support programme.
The central bank has not signalled aggressive intervention in the spot market, a position some analysts interpret as an effort to preserve international reserves and maintain a buffer against external shocks.
“The central bank appears to be prioritising reserve adequacy over short-term exchange rate smoothing,” a market trader in Accra said. “That naturally limits immediate dollar liquidity in the system.”
The anticipated IMF inflow is expected to provide some relief to Ghana’s external position, but market participants caution that its impact on the exchange rate will depend on timing and how quickly it is channelled into market liquidity.
Beyond official inflows, traders also highlight continued foreign exchange demand linked to energy imports, manufacturing inputs and external debt servicing obligations. These factors have kept underlying demand for hard currency elevated.
Ghana’s currency has experienced intermittent periods of stability in recent months, supported by improved market sentiment under its IMF-supported reform programme. However, analysts say that stability has remained fragile, often reversing when inflows slow or liquidity tightens.
Some market observers note that the cedi’s recent trajectory reflects a broader sensitivity to the timing and consistency of foreign exchange supply rather than a structural shift in sentiment.
“The market reacts quickly when supply dries up, even briefly,” another analyst said. “What matters most is steady FX availability, not one-off inflows.”
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Looking ahead, analysts expect the cedi to remain under pressure in the near term, with projections pointing to a trading range of 11.35 to 11.86 to the US dollar over the next two weeks.
This outlook reflects expectations of a tug-of-war between foreign exchange demand and anticipated inflows from multilateral and portfolio sources. However, traders caution that volatility could persist if inflows are delayed or unevenly distributed across the banking system.
Despite recent weakness, Ghanaian authorities have highlighted macroeconomic stabilisation gains under the IMF programme, including easing inflation and fiscal consolidation efforts. However, exchange rate stability remains one of the key challenges facing policymakers.
For now, the cedi remains highly sensitive to shifts in external financing, import demand cycles and central bank liquidity decisions, leaving the currency exposed to short-term volatility as market participants watch for clearer supply signals.
