Ghana’s currency, the cedi, is back under strain after months of stability, with Barclays warning that it could weaken further if the Bank of Ghana cuts interest rates while government spending continues to rise. The warning has reignited concerns that the currency’s brief period of resilience may not last.
Earlier this year, the cedi held firm on the back of strong gold and cocoa earnings, easing inflation, and renewed investor optimism following Ghana’s debt restructuring programme. For a while, it even stood out as one of Africa’s better-performing currencies. But by mid-2025, those gains had started to unwind.
Dollar shortages, delayed donor inflows, and increased government expenditure eroded confidence in the local unit. Analysts say the currency now risks slipping back into the familiar cycle of depreciation that has haunted it in recent years. Barclays noted that any monetary policy easing could speed up capital outflows and deepen the cedi’s slide.
For ordinary Ghanaians, a weaker cedi means higher import costs, which in turn push up fuel, food, and essential goods prices. Economists warn that inflation—recently on a downward path—could flare up again. Businesses, especially those repaying dollar-denominated loans, also face rising costs that could squeeze profitability and strain banks still recovering from debt restructuring shocks.
Ghana’s struggles mirror wider challenges across Africa, with Nigeria’s naira and Kenya’s shilling also weakening this year as central banks juggle growth and inflation. Still, Ghana’s heavy reliance on imports and fragile investor confidence makes its situation especially delicate. While commodity exports provide some cushion, fluctuating gold and cocoa markets leave little room for comfort.
Looking ahead, investors will be closely watching the Bank of Ghana’s next moves. A premature interest rate cut, combined with higher government spending, could tip the balance further against the cedi. For now, the local currency remains vulnerable, shadowed by fiscal risks and global uncertainty.
