Why the Cedi Keeps Falling — And What It Means for Businesses and Everyday Ghanaians

The Ghana cedi has once again entered turbulent waters, slipping further against major foreign currencies despite attempts by the Bank of Ghana (BoG) to intervene. On Wednesday, January 29, 2025, the cedi opened trading at GH¢15.25/15.40 per US dollar across forex bureaux—an alarming trend that is squeezing businesses, importers, and individuals who depend on dollar liquidity for daily operations.

Many woke up hoping for better news following the BoG’s latest liquidity injection meant to stabilize the local currency, but the market barely blinked. Instead, the cedi continued its downward slide, signaling a deeper structural problem far beyond short-term interventions. For businesses and households, this isn’t just a currency story; this is a cost-of-living story, a survival story, and a future-of-the-economy story.

This editorial by The High Street Business breaks down what’s really driving the cedi’s depreciation, why recent interventions have not worked, and what Ghana truly needs to reverse this cycle.

Why the Cedi Keeps Losing Ground

1. A Classic Demand-and-Supply Problem

Market watchers and forex traders are unanimous: the demand for dollars far exceeds supply.

Importers, manufacturers, oil marketers, pharmaceutical companies, and even individuals looking to settle obligations or travel all continue to chase limited dollar availability. With limited inflows from exports and foreign investments, the currency battles a constant shortage—making depreciation almost inevitable.

As forex trader Kojo Letsa explained to SKB Journal, “Despite the regulator’s valiant efforts to stabilize the local currency… the pair has stubbornly refused to yield.” His warning hints at a grim outlook: unless Ghana sees tangible inflows or economic shifts, the cedi may continue on this bullish USD trend, worsening in the weeks ahead.

2. Weak Export Performance

Ghana remains heavily dependent on a few export commodities—gold, cocoa, and oil. But export proceeds are inconsistent because of:

• cocoa production challenges

• fluctuating global commodity prices

• reduced oil output

• value-added exports being extremely low

This means less dollar inflow to match growing demand.

3. Heavy Import Dependence

Ghana imports nearly everything—from fuel to food to raw materials—which increases the constant pressure on the dollar.

Every time importers must restock inventory, transport fuel, or buy machinery, the demand for foreign currency spikes.

4. Investor Confidence Still Fragile

Despite progress under the IMF programme, investor confidence is still not fully restored. Foreign portfolio investors remain cautious about re-entering Ghana’s bond market or holding long-term cedi assets.

This reduces foreign exchange inflows and keeps pressure on the local currency.

5. Speculative Behaviour

Once the market senses weakness, speculators jump in:

• People hold dollars expecting further depreciation.

• Businesses preemptively increase prices to cover future exchange rate losses.

• Others rush to buy dollars “now” to avoid paying more later.

This behavior accelerates depreciation even when fundamentals remain unchanged.

How the Weak Cedi Is Affecting Businesses

1. Importers Are Being Crushed

Import-dependent businesses need more cedis to buy the same amount of goods they brought in last year. This erodes profit margins and forces price hikes.

Supermarkets, electronics retailers, building materials suppliers, and pharmaceutical importers face the steepest challenges.

2. Operating Costs Are Skyrocketing

As the cedi weakens:

• fuel prices rise

• transport fares increase

• electricity tariffs adjust upward (due to forex exposure)

• logistics costs surge

These increases all find their way into the final price of goods and services.

3. SMEs Are Struggling the Most

Most small businesses lack the capital buffers to withstand major currency fluctuations. The cost of restocking becomes unpredictable, and access to credit remains expensive.

For many SMEs, this creates a real fear of collapse.

4. Manufacturers Are Feeling the Pressure

Even local manufacturers depend on imported inputs—machine parts, packaging materials, raw materials. As the cost of imports rises, production becomes more expensive.

This weakens Ghana’s ability to compete even locally, let alone under AfCFTA.

The Impact on Consumers: Higher Prices and Lower Purchasing Power

For ordinary Ghanaians, the depreciation translates into painful everyday realities:

• prices of imported food items rise

• fuel costs go up

• transport fares increase

• medicine and healthcare become more expensive

• rent increments follow inflation trends

• school fees rise due to higher operating costs

A weakening cedi affects every Ghanaian—whether you import, drive, eat, travel, or simply spend money.

Why the BoG Interventions Are Not Working

The Bank of Ghana has been injecting dollars into the market, but the impact has been minimal because the core issue remains: demand outstrips supply.

Interventions can temporarily slow depreciation but cannot reverse it unless Ghana:

• boosts export earnings

• attracts consistent foreign investment

• reduces import dependence

• stabilizes inflation and interest rates

• builds robust reserves

Without structural changes, interventions are like “putting water in a basket”—the effect doesn’t last.

Short-Term Outlook: More Pressure Ahead

Economists and forex analysts predict that unless:

• a major FX inflow arrives,

• global commodity prices shift in Ghana’s favor, or

• the BoG tightens the market further,

the cedi will likely continue on its bearish path.

Businesses should prepare for continued volatility and factor higher exchange rates into operational and pricing decisions.

Long-Term Solutions: What Ghana Must Do

Experts have repeatedly emphasized the need for deeper reforms:

1. Boost Exports (Value-Added, Not Raw Materials)

Ghana must stop exporting mostly raw commodities and start exporting value-added products to earn higher and more stable foreign currency.

2. Reduce Import Dependency

Investment in agriculture, local manufacturing, and industrialization is the only sustainable way to reduce reliance on imported goods.

3. Improve Local Production of Essential Goods

Food, fuel alternatives, pharmaceuticals, machinery components— these need local solutions.

4. Increase Foreign Direct Investment (FDI)

Stable policies, predictable taxation, and reduced bureaucratic barriers can attract more investors.

5. Build Production Capacity Through Technology and Skills

Digitalization, automation, and vocational training can make Ghana’s industries more competitive.

6. Strengthen Domestic Revenue Mobilization

Reducing debt dependency and increasing fiscal discipline will support long-term currency stability.

Conclusion from THSB

The weakening cedi is a symptom—not the disease. The symptom will persist until Ghana addresses the structural issues long embedded in the economy. For now, the pressure remains on businesses, consumers, and the broader economic system. While BoG interventions may soften the blow, they cannot fix the root causes.

Ghana must shift toward an export-driven, production-based economy if it hopes to stabilize the cedi and create sustainable growth. Until then, businesses and households must brace for continued currency volatility—and all the economic consequences that come with it.

Source: The High Street Business

Samuel Kwame Boadu

Samuel Kwame Boadu is a Ghanaian entrepreneur, writer, and digital consultant passionate about creating impactful stories and business solutions. He is the Founder & CEO of SamBoad Business Group Ltd, a dynamic company with subsidiaries in digital marketing, logistics, publishing, and risk management.