Accra, Ghana, May 27, 2025
The Ghanaian cedi has witnessed an impressive turnaround from its sharp depreciation seen in recent years and marks an all-time high in percentage terms. The numbers tell a surprising story. The currency has clawed back significant ground against major world currencies.
Fresh figures from the Bank of Ghana reveal the cedi has gained 24% against the US dollar, 16% against the British pound, and 14% against the euro. As of May 2025, the currency exchanged against the dollars at about 11.85 cedis, a far cry from recent lows. The pound buys roughly 15.84 cedis, while the euro fetches around 13.34 cedis in Accra’s currency markets.
The sudden rebound has left analysts and neighbouring economies asking what is behind Ghana’s currency revival, and if it is sustainable.
The story of the cedi’s resurgence is one of bold policy moves, a renewed focus on the country’s natural resources, and Ghana’s president, John Mahama’s government’s determination to break free from the cycles of economic instability that have long plagued the national currency. At the heart of this turnaround is gold, Ghana’s glittering lifeline, and a central bank that’s made some gutsy decisions to back its currency with something more tangible than promises.
In May 2024, the Bank of Ghana embarked on an ambitious plan to shore up its reserves. By April this year, the central bank had increased its gold holdings by 40.6%, from 22.3 tonnes to 31.2 tonnes, according to a recent policy brief by The Business & Financial Times. This was not just a symbolic move. Gold, a globally trusted store of value, gave the cedi a stronger foundation, signalling to investors and markets that Ghana was serious about stabilising its currency.
The strategy did not stop at stockpiling gold. The government introduced a policy requiring all gold transactions, whether for export or domestic sale, to be conducted in cedis. This forced a greater demand for the local currency, as buyers, both local and international, had to convert their dollars into cedis to access Ghana’s gold, one of the country’s biggest exports.
This policy was not entirely new. Ghana has long grappled with dollarisation, where the U.S. dollar often overshadowed the cedi in major transactions. Back in 2014, the central bank limited foreign exchange withdrawals to $10,000 and banned banks from granting dollar-denominated loans to customers paid in cedis, according to a BBC News report from the time. Those measures aimed to reinforce the cedi as legal tender but met resistance from forex traders who saw the restrictions as impractical. This time, however, the gold-backed approach has gained more traction, partly because of the sheer volume of gold reserves now underpinning the cedi.
Fiscal Reforms and Market Confidence
Ghana’s government is not just banking on gold. It is also tightening spending, and the world is taking notice. International observers have cautiously welcomed the shift, with S&P Global Ratings bumping Ghana’s credit rating up to CCC+ from selective default in May. The agency highlighted stronger economic growth, steady fiscal reforms, and a healthier external balance as reasons for the upgrade.
A major milestone is the successful restructuring of Ghana’s Eurobond debt back in October 2024, which played a big role in rebuilding confidence. For years, the weight of external debt dragged down the economy, a burden that consumed 62% of the government’s liabilities and nearly half the country’s GDP. The recent restructuring deal finally offered relief, loosening the financial chokehold just enough to let officials shift their focus toward stabilising the broader economy.
Improved fiscal management has also played a role. Ghana has had a history of overspending, especially during election years, a habit that S&P warned could still derail progress. But in the lead-up to the 2024 elections, the government showed uncharacteristic restraint, cutting back on borrowing and working to boost tax collection, a perennial weak spot. These efforts, combined with the central bank’s gold strategy, have restored a degree of confidence in the cedi. Markets, once jittery about Ghana’s economic trajectory, are starting to take notice.
Ghana’s timing could not have been better. Global prices for gold and cocoa, two of the country’s biggest exports, have soared in recent years, bringing in a flood of foreign exchange. In the past, falling prices for these commodities had hammered the cedi, as seen in 2014 when the currency lost 23% of its value in a single year, according to the BBC. Now, the opposite is happening. Ghana’s foreign reserves are growing, thanks to a surge in export earnings, and that is changing the game for the cedi. With deeper pockets, the central bank can now fend off speculative currency pressures more effectively.
The extra breathing room has also opened the door for policies designed to wean the economy off its heavy dependence on imports. For years, Ghana’s trade imbalance, importing far more than it exports, put relentless pressure on the cedi. The Mahama government has rolled out incentives for local industries, particularly in agriculture and manufacturing, to produce more goods domestically.
“Reducing reliance on imports through policies that support local industries can ease pressure on the cedi,” noted a Business & Financial Times brief. It is a slow process, but early signs are promising. Locally produced rice and poultry, for instance, are starting to compete with imported alternatives, a shift that could save millions in foreign exchange.
Not everyone is convinced the cedi’s strength will last. Some have warned that the strategy hinges on Ghana’s gold reserves, which are not infinite. They say the government is simply replicating the programmes of Nigeria’s president, Bola Tinubu, which, they say, is not sustainable unless they have unlimited gold reserves.
This concern is valid. Ghana’s economy has always swung between highs and lows, its fate often shackled to the unpredictable swings of global commodity markets. Analysts have sounded the alarm once again, warning that the country is still at the mercy of wild currency shifts and sudden drops in the price of key exports. Another plunge in gold or cocoa prices, or worse, a return to reckless spending, they say, could send the cedi into another tailspin, wiping out the progress made so far.
There’s also the question of structural reforms. Ineffective tax collection and a high cost of servicing debt continue to loom large. The government has made impressive strides, but these issues require long-termfixess.
Ghana has done better than Nigeria, where the naira continues to struggle. Nigeria’s reliance on imports and its failure to diversify away from oil have left the naira vulnerable. Some Nigerians argue that a weaker naira could force the country to produce more locally, but for now, the pain of devaluation is sharp.
Ghana, by contrast, has leveraged its gold and cocoa to chart a different path. By tying the cedi’s value to a tangible asset like gold and enforcing policies that prioritise the local currency, the country has found a formula that is working, at least for now.
The cedi’s turnaround is a rare bright spot in a region often beset by economic challenges. After years of watching their currency decline, Ghanaians are daring to hope just a little that the worst may finally be over. But optimism comes with a heavy dose of realism. Keeping this fragile recovery alive will not be easy. It will take stubborn fiscal discipline, creative policy moves, and a favourable wind from the global markets. For a country that has been knocked down more times than most, Ghana is proving it knows how to get back up.
By doubling down on its natural resources, tightening its fiscal policies, and refusing to let the dollar dominate its economy, the country has given the cedi a fighting chance. Whether this marks a true turning point or just a temporary reprieve remains to be seen. But in Accra’s bustling markets, where the cedi now buys more than it has in years, there is a renewed sense of pride, and hope.
