Amid speculation of a potential rate cut by the U.S. Federal Reserve, the Ghanaian cedi is showing signs of stabilization after months of depreciation. Having lost over 27% of its value against the U.S. dollar since the beginning of 2024, the cedi’s recent performance offers some relief to Ghana’s economy, particularly in light of the U.S. Federal Reserve’s possible decision to cut interest rates by 25 to 50 basis points.
This anticipated move could weaken the dollar, giving the cedi a much-needed boost. In recent weeks, the cedi has made gains not only against the dollar but also other major foreign currencies, appreciating by 0.46% against the dollar, 0.47% against the British pound, and 0.56% against the Euro. Analysts believe these movements reflect growing market optimism and renewed confidence in the currency.
The Bank of Ghana has played a critical role in these improvements, auctioning foreign currency to support key sectors, especially the Bulk Oil Distribution Companies (BDCs). This intervention has helped ease the pressure on the cedi, allowing it to rebound during a period typically marked by high corporate demand ahead of the festive season.
In addition to central bank actions, Ghana’s first gold refinery, inaugurated in August 2024, is expected to contribute to stabilizing the cedi further. The Royal Ghana Gold Refinery, with a capacity to process 400 kilograms of gold daily, aims to enhance the nation’s foreign exchange reserves by boosting export revenues from artisanal and small-scale mining operations.
With the U.S. Federal Reserve’s policy decision on the horizon, the outlook for the cedi remains cautiously optimistic. A weaker dollar would ease the strain on import costs and inflation, which have been key challenges for the Ghanaian economy in recent months.
As Ghana navigates these economic waters, the performance of the cedi will likely depend on external market conditions, including global monetary policies and internal measures aimed at fostering industrial growth and economic stability.