How Ghana’s cedi went from Africa’s best-performing currency to weakest in 2026

Less than a year ago, Ghana’s cedi was the continent’s biggest macroeconomic success story.

After appreciating by more than 40 percent against the United States dollar in 2025—the first annual gain in nearly 33 years—the cedi emerged as Africa’s best-performing currency. The rally restored investor confidence, slowed inflation to single digits, strengthened Ghana’s foreign exchange reserves, and became a symbol of the country’s remarkable recovery from the debt crisis that pushed it into an International Monetary Fund (IMF) bailout.

Today, that narrative has changed.

Since the start of the year, the cedi’s steady depreciation has culminated in it becoming the continent’s weakest-performing currency in July, marking a reversal from the record rally that made it the continent’s standout performer last year.

Data compiled by real-time data tracking platform African Markets show the cedi has depreciated by 11.6 percent against the dollar this year as of July 28, making it the poorest-performing currency among 17 African currencies tracked.

The decline is nearly double that of Tanzania’s shilling, the second-worst performer, while Zambia’s kwacha and Nigeria’s naira have emerged as the continent’s strongest currencies, appreciating 15.4 percent and 5.58 percent, respectively.

This has surprised investors because it comes barely few months after Africa’s top gold producer was being celebrated as one of the continent’s strongest macroeconomic turnaround stories.

Unlike previous currency crises, however, analysts argue that the latest selloff is not being driven by deteriorating economic fundamentals. Instead, it reflects a convergence of external shocks and seasonal market pressures that have increased demand for dollars at a time when global investors are once again seeking the safety of the US currency.

The comeback that surprised Africa

The cedi’s appreciation last year was more than just a currency rally—it represented West African nation’s return to macroeconomic stability after years of turbulence.

Following a nearly 19 percent depreciation in 2024, the currency rebounded strongly as IMF-backed reforms restored confidence in the economy. Fiscal consolidation, aggressive monetary tightening, improved foreign exchange management and booming gold exports combined to reverse one of Africa’s deepest currency declines.

The recovery was reinforced by higher international gold prices, stronger reserves and the government’s debt restructuring programme, which improved investor sentiment after years of fiscal uncertainty.

By the end of 2025, Ghana’s international reserves had climbed to nearly $14 billion, providing the Bank of Ghana with one of its strongest external buffers in years.

The establishment of GoldBod also played an important role in strengthening the country’s external position. By formalising gold purchases from artisanal miners and ensuring export proceeds flowed through official channels, the programme helped improve foreign exchange inflows and reserve accumulation.

The stronger currency quickly filtered through the broader economy.

Imported inflation eased sharply as the cost of fuel, machinery and consumer goods declined, allowing headline inflation to fall to 9.4 percent in September—the first single-digit reading since 2021. The improvement gave the Bank of Ghana (BoG) room to begin easing monetary policy after maintaining one of Africa’s highest interest rates for several years.

“The speed of Ghana’s disinflation reflects a rare alignment of tight macro policy, improved FX inflows, and restored investor confidence,” SBM Intelligence noted in a recent report, adding that IMF disbursements under the country’s $3 billion Extended Credit Facility further boosted market confidence.

The appreciation also reduced the government’s foreign debt servicing costs while lowering import bills for businesses, reinforcing expectations that the country’s had finally turned the corner after one of the continent’s most severe economic crises.

What changed?

The recent depreciation shows that even Africa’s strongest currency recoveries remain vulnerable to global shocks.

The first signs of pressure emerged earlier this year.

Bloomberg reported in February that the cedi had already become the weakest-performing currency among the 23 African currencies tracked by the publication after depreciating nearly five percent as corporate demand for foreign exchange accelerated. Importers, energy companies and manufacturers increasingly sought dollars to finance purchases abroad, while seasonal demand continued to outstrip supply.

Since then, geopolitical developments have compounded those pressures.

Hostilities between the United States and Iran have unsettled global energy markets, sending Brent crude prices close to $100 a barrel during the conflict. For Ghana, a net importer of petroleum products, higher oil prices translated directly into higher demand for foreign currency as fuel importers scrambled to secure additional dollars.

The impact has rippled across the economy, raising transport and logistics costs, feeding into food inflation and increasing pressure on the country’s external accounts.

BoG’s own data show the average interbank exchange rate weakened by 5.75 percent during the first half of the year, reversing the sharp appreciation recorded during the same period in 2025.

Yet analysts argue the currency’s weakness cannot be explained by higher oil prices alone.

They say three domestic factors have amplified the external pressures facing the cedi: rising external debt repayments, stronger seasonal demand for dollars from importers, and a sharp increase in the country’s petroleum import bill.

Earlier this month, Ghana made an early $700 million Eurobond repayment, bringing total external debt payments since last year January to $2.1 billion. While the move reinforced the government’s commitment to restoring debt sustainability after restructuring its obligations, it also increased demand for foreign exchange.

For a country still rebuilding its external buffers, large debt repayments inevitably reduce dollar liquidity in the market.

According to Isaac Kofi Agyei, head of research and data at JoyNews, these factors have combined to reverse much of last year’s currency gains.

“The government has been accelerating eurobond repayments, which pulls more foreign currency out and weighs on the cedi,” he said.

Agyei noted that businesses have also begun importing goods earlier than usual ahead of the Christmas season, increasing corporate demand for foreign exchange months before the traditional year-end surge.

“Import demand has surged earlier than usual as businesses stock up ahead of the Christmas season, lifting demand for dollars and adding further downward pressure on the cedi.”

The renewed conflict in the Middle East has compounded those pressures.

“Then, the renewed Iran conflict has driven up global oil prices. As a net petroleum importer, Ghana’s monthly fuel import bill has risen from an average of about $400 million per month in 2025 to around $500 million per month in 2026, further straining foreign exchange,” he said.

The combination of higher fuel import costs and rising corporate demand has forced the central bank to inject more dollars into the market.

According to the bank data, weekly foreign exchange auctions increased to about $220 million during the second week of July, compared with between $50 million and $100 million previously. Even so, analysts say the intervention was insufficient to meet market demand, highlighting the scale of pressure facing the currency.

A question of confidence

Wilson Zilevu, economic and fixed income analyst at Databank Research, believes the latest weakness reflects temporary market dynamics rather than a deterioration in Ghana’s underlying economy.

“We have seen that the central bank has been consistent in supplying foreign exchange. Nonetheless, demand pressures have come on very strongly, with market participants pricing in further dollar strength, leading to the current bearish sentiment,” Zilevu said.

He argues that while it’s international reserves—currently around $14 billion—provide a significant buffer, markets also expect visible intervention from the central bank.

“The buffers are strong, but having strong buffers without any intervention or mediation in the market would fuel speculative bearish expectations, which can then lead to normal depreciation along the curve.”

That distinction is important.

Unlike the currency crisis that forced Ghana into an IMF bailout in 2023, today’s macroeconomic backdrop is considerably stronger.

The country has restructured much of its debt, rebuilt international reserves, restored investor confidence and returned to robust economic growth. Last week, Cassiel Ato Forson, the country’s finance minister, announced that the economy exceeded $100 billion for the first time in 2025 after expanding by 6 percent, while public debt has continued to decline.

The country’s inflation trajectory also remains far healthier than during the previous crisis, even though price pressures have begun to return.

After falling to 9.4 percent in September—the first single-digit reading since 2021—inflation began rising again following the outbreak of the US-Iran conflict earlier this year. Consumer prices increased for three consecutive months, reaching 5.3 percent in June, largely driven by higher fuel and transport costs.

Can the cedi recover?

The key question for investors is whether the current depreciation marks the beginning of another prolonged currency crisis or simply a correction after one of Africa’s strongest rallies.

Most economists lean toward the latter.

The cedi’s more than 40 percent appreciation last year was widely viewed as exceptional and unlikely to be sustained indefinitely. Currency markets rarely move in a straight line, and periods of rapid appreciation are often followed by corrections as import demand rebounds and investors take profits.

More importantly, the drivers behind 2025’s rally have not disappeared.

Gold prices remain historically high, Ghana continues to benefit from IMF programme support, international reserves are substantially stronger than they were three years ago, and fiscal discipline has improved.

The challenge now is whether those structural gains can offset increasingly difficult global conditions.

A prolonged period of elevated oil prices, a stronger US dollar and tighter global financial conditions could continue to weigh on the cedi, even if Ghana’s domestic fundamentals remain relatively sound.

BoG has so far opted for measured rather than aggressive intervention, balancing the need to support the cedi with its longer-term objective of rebuilding foreign exchange reserves.

Zilevu of Databank Research said the central bank’s cautious approach reflects the trade-off between defending the currency today and preserving reserve buffers for future shocks.

“The bank has been quite cautious because the country is also pursuing an accelerated reserve accumulation programme,” he said. “That has likely limited the scale of its interventions in the foreign exchange market. The bank could have come in more aggressively to meet demand, but it also understands the seasonal nature of the market.”

He noted that foreign exchange demand typically peaks as businesses begin importing goods ahead of the festive season, particularly between August and September, when the central bank is likely to step up its support for the currency if pressures intensify.

“The Bank has the data and knows when demand is strongest during the year. As we approach the festive season, that’s when it could intervene more aggressively to support the currency. If depreciation becomes excessive, it will move.

The cedi’s rapid reversal is therefore less a verdict on Ghana’s reforms than a reminder of the vulnerability of frontier-market currencies to external shocks. For policymakers, the priority will be preserving confidence by ensuring adequate foreign exchange liquidity while maintaining the fiscal and monetary discipline that transformed the cedi into Africa’s best-performing currency only few months ago.