Ghana Hits More Dollar Price Hurdles as Cedi Fall Craters 5.3% in Q1 2025

 

In the first Ghana Hits More Dollar Price Hurdles as Cedi Fall Craters 5.3% in Q1 2025arter of 2025, the Ghanaian cedi showed a 5.3% depreciation year-to-date against the US dollar, illustrating the continued economic strain. Nonetheless, a slow resurgence is seen lately, which is promising news for firms and consumers alike.

Reasons for the Depreciation

Thrusting the cedi’s depreciation in Q1 2025 are many factors, as follows:

Strong Dollar Demand – Pressure on the local currency is applied by higher imports and foreign exchange needs.

External Economic Conditions – General uncertainties in the global economy, especially inflation and interest rate policies in major economies have weighed on Ghana’s forex market.

Economic situation at home – Tax weaknesses and the "usual suspects" of the economy continued to undermine investor confidence in cedi.

Signs of Recovery

In spite of the depreciation, cedi has started to stabilize due to:

Increasing Forex Reserves – The Bank of Ghana’s interventions including forex auctions have also helped[...]

Adjustments in Economic Policy – The government has started to reap some positive results from its efforts to promote local production and attract foreign investment.

More Earnings from Exports — The expansion of agricultural and mineral production has added to inflows of foreign exchange that have boosted the cedi’s strength.

Implications for Businesses and Consumers

Import Costs – Businesses that relied on imports experienced greater costs, which could have resulted in increased prices.

Prices — A stable cedi would return confidence among investors and strengthen economic growth.

Purchasing Power of Consommation – If recovery lasts, it may lower inflationary pressures and increase affordability of goods and services