The cedi is still under pressure from increased corporate dollar demand, seasonal dividend repatriation, and high oil prices, even though foreign exchange (FX) reserves reached their highest level in over a year in May.
According to recent data from the Bank of Ghana, gross international reserves increased from US$13.8 billion at the end of December 2025 to US$14.4 billion as of May 18, 2026, or 5.7 months of import cover.
Ghana’s external position improved in the first quarter as a result of the reserve build-up; the current account surplus increased to US$3.10 billion from US$2.43 billion during the same time in 2025.
At the central bank’s 130th Monetary Policy Committee press briefing, Bank of Ghana Governor Dr. Johnson Pandit Asiama stated that despite growing payments for services and investment income, the stronger external position was fuelled by strong gold and cocoa export earnings as well as resilient remittance inflows.
However, cedi stability has not resulted from the stronger reserve position.
According to the central bank, the cedi lost 8.4% of its value against the US dollar in the interbank market in the year ending May 15. Market watchers predict losses have increased in recent weeks.
Due to persistent pressure on foreign exchange demand, Databank Research reported that the currency’s year-to-date depreciation had reached 10.11 percent by the end of the third week of May.
During the most recent two-week period monitored by Databank, the local currency closed at mid-market interbank rates of GH¢11.63 per US dollar, while retail market rates declined to roughly GH¢12.20 per US dollar.
Dr. Asiama said that seasonal dividend payments by multinational corporations and increased dollar demand from the energy industry are the main causes of the current pressure.
He said that the regular FX auctions held by the central bank were still going strong and had enough supply.
The Governor stated, “Our auction is still there. We have announced it, pre-announced it; the banks are aware. We continue doing what we are doing.”
The size of the central bank’s FX market presence had previously been noted by the IMF as a cause for worry.
Driven by the Domestic Gold Purchase Programme amid rising gold prices, the pace of intermediation accelerated in 2025, with US$1.4 billion injected in the first quarter alone before full-year efforts reached almost US$10 billion.
The IMF’s policy recommendations for a formal framework for FX intervention served as the basis for BoG’s subsequent operationalisation of a Foreign Exchange Operations Framework, which calls for a rules-based structure with twice-weekly auctions and monthly targets that are pre-announced to licensed banks.
Despite the depreciation pressures, Dr. Asiama emphasised that the central bank is not participating in exceptional market intervention, claiming that the current strategy is centred on maintaining and growing reserve buffers following recent years of macroeconomic turmoil.
“We are not intervening; we are rather building reserves. The auctions are a regular part of our intermediation efforts,” the Governor stated.
The Governor claims that BoG has continued to supply foreign exchange liquidity through its twice-weekly auctions, with around US$1 billion scheduled for market release this month.
“We have not reduced our presence at all. The banks are aware of it. There should not be too much panic about that,” he added.
The central bank’s stance indicates that officials are trying to strike a compromise between two conflicting goals: preserving resource sufficiency and preventing excessive exchange-rate volatility, which might undo recent achievements in disinflation.
The recent fall of the cedi, according to Databank Research, surpassed its upper-band projection of GH¢11.40 per US dollar, in part because BoG seemed hesitant in its FX intermediation despite anticipation of a potential US$385 million disbursement from the International Monetary Fund (IMF).
The central bank’s strategy might be “a deliberate effort to preserve reserves while awaiting clearer and more sustainable inflow visibility, particularly amid lingering demand pressures,” according to the research firm.
The plan, according to analysts, is a reflection of lessons learned from the country’s previous balance-of-payments crisis, in which aggressive reserve drawdowns failed to stop the cedi’s steep decline and ultimately compelled the government to enter an IMF-backed economic recovery program.
However, there are dangers for inflation and fuel prices associated with the present devaluation cycle, especially since the Middle East’s geopolitical unrest continues to feed high crude oil prices.
Dr. Asiama agreed that the prognosis for Ghana’s foreign exchange market was still heavily influenced by outside events.
Any easing of tensions in the Middle East and a drop in oil prices toward $70 or $80 per barrel, he said, might help reduce local FX pressures.
“But for now, the pressures are real and we understand why they must be there at this time,” he said.
Ghana’s underlying foreign exchange supply situation is still comparatively robust, according to a market analyst acquainted with the central bank’s policy on an X post. This is mostly due to high gold prices and ongoing purchases by the Ghana Gold Board from the artisanal and small-scale mining sector.
The analyst went on to say that the Bank of Ghana seemed prepared to let the cedi gradually return to what he called its “true value” while also fixing its balance sheet.
However, he cautioned that if currency weakening substantially contributes to domestic fuel costs and overall inflation, authorities may eventually come under pressure to step up intervention operations.
Expectations in the market are still cautious. Over the next two weeks, Databank predicts that the cedi will trade between GH¢11.55 and GH¢11.86 per US dollar, depending on how well foreign exchange demand and the amount of central bank supply are balanced.
Source: newsthemegh.com