Table of Contents
Abstract
It is both curious and sobering to hear segments of the Ghanaian populace lament that they have not felt the effects of the cedi’s remarkable appreciation against the US dollar and other major currencies. This sentiment, though understandable in a high-cost economy where the prices of goods and services remain stubbornly high, often fails to capture the macroeconomic strides that underpin the local currency’s recent resurgence. Indeed, many consumers measure economic progress solely by the cost of food, fuel, and transport areas where price rigidity and market inertia can delay the trickle-down benefits of currency gains.
However, the appreciation of the cedi is not an abstract academic achievement; it is a tangible marker of renewed investor confidence, improved foreign exchange liquidity, and sounder macroeconomic stewardship. The fact that the cedi has clawed its way back from depths of uncertainty, regaining over 40% of its value since January 2025, is not just a statistical win, it is a national recovery story in motion. The stabilization of the exchange rate holds long-term implications: easing pressure on import bills, reducing the cost of external debt servicing, and creating a more predictable environment for trade and investment.
Yet, the psychological scars of past economic turbulence linger. Many Ghanaians, having endured months of rapid inflation and a plummeting currency, remain cautiously skeptical. They await visible reductions in market prices before acknowledging any sense of relief. In that context, the disconnection between macroeconomic progress and microeconomic perception is not denial, it is lived experience. But with sustained policy discipline and a firm grip on inflation, the benefits of a stronger cedi will inevitably ripple through the economy. It is just a matter of time before the echo of this appreciation is heard in every household, market stall, and fuel pump.
A 42% Appreciation – The Numbers Don’t Lie
In January 2025, the exchange rate stood at GHS14.70 to USD1. By May 27, it had improved significantly to GHS10.35. This movement in the exchange rate suggests a strong 42% appreciation of the cedi. Such a change is not trivial; it indicates a positive shift in Ghana’s macroeconomic outlook and market confidence.
When a local currency appreciates, it essentially means it has gained value relative to foreign currencies. This can have wide-ranging impacts from reducing the cost of imports to easing inflationary pressures. Yet, to truly appreciate the magnitude of this development, one must look at the math.
Direct Quotation Approach
Using the direct quote, where the exchange rate expresses how many units of local currency are needed to buy one unit of foreign currency, we apply the formula:
(Appreciation Rate) = (Old Rate – New Rate) / New Rate
Substituting values: (14.70 – 10.35) / 10.35 ≈ 42%
Though the percentage is positive, this result can appear counterintuitive because the appreciation is reflected as a decrease in the rate. Nonetheless, a falling direct rate indicates that the cedi now requires fewer units to buy a dollar—a hallmark of currency strength.
Indirect Quotation Approach
In contrast, the indirect quotation expresses how many units of foreign currency one can obtain with a single unit of the local currency. This is especially useful in cross-border trade or investment analysis. For example:
January: 1 / 14.70 = 0.0680 USD May: 1 / 10.35 = 0.0966 USD
Rate of change = (0.0966 – 0.0680) / 0.0680 ≈ 42%
This reconfirms the appreciation of the cedi where one cedi fetches more dollars than before. It highlights growing confidence in the domestic currency, potentially driven by increased foreign inflows, macro stability, and better monetary management.
The Dollar Has Depreciated Too By 29.6%
Currency appreciation is inherently a two-sided coin, what one gains, the other yields. In this instance, the US dollar has depreciated against the Ghanaian cedi by approximately 29.6%, reflecting the cedi’s corresponding strength over the same period.
Using the same formula in reverse:
(Start – End) / End
Indirect: (0.0680 – 0.0966) / 0.0966 ≈ -29.6% Direct: (10.35 – 14.70) / 14.70 ≈ -29.6%
This shows the weakening of the dollar relative to the cedi over the period. Such depreciation could be a reflection of changing capital flows, shifts in trade balance, or confidence in Ghana’s policy direction.
The Governor Has Spoken: No More Illusions
In a decisive and reassuring statement on May 28, 2025, Dr. Johnson Asiama, Governor of the Bank of Ghana, addressed the market’s speculative tendencies with refreshing clarity and bold authority. His message was not only a response to the lingering doubts within sections of the populace but also a pointed call to recalibrate expectations in light of changing economic fundamentals. Speaking with the weight of institutional credibility, Dr. Asiama declared:
“To those still holding dollars in anticipation of a return to old patterns of depreciation, I will say this plainly: The market has changed. The narrative has changed. And the policy environment has changed.”
Such pronouncements are not mere rhetoric as they are laden with profound monetary insight and a deeper understanding of Ghana’s evolving macroeconomic terrain. The Governor’s remarks affirm that the sustained appreciation of the cedi is not a fleeting coincidence but the result of deliberate policy interventions, tightened fiscal controls, strategic inflows, and a recalibrated monetary framework.
By publicly reinforcing the strength of the cedi, the Bank of Ghana sends a strong signal to currency traders, investors, importers, and exporters alike: speculation against the local currency will no longer yield predictable gains. In effect, the central bank is reclaiming the narrative and setting the tone for disciplined, data-driven expectations. This also provides assurance to the international community and domestic markets that there is policy coherence and institutional resolve underpinning the exchange rate stability.
Moreover, the Governor’s remarks serve a behavioral function. They aim to break the cyclical psychology of dollar hoarding and currency panic, an entrenched response that has historically weakened the cedi in times of uncertainty. His statement is a subtle but powerful shift from passive reassurance to proactive narrative management. It redefines the playing field and invites all market actors to move in concert with a new Ghanaian financial reality, one that embraces resilience, transparency, and a forward-looking posture.
Conclusion: Let the Facts Speak Louder Than Fear
While skepticism is a natural response in uncertain economic times, the appreciation of the cedi is no illusion, it is an empirical reality supported by hard numbers, meaningful policy reforms, and clear institutional affirmations. In a country where citizens have grown weary from bouts of inflation and currency volatility, such doubts are rooted not in ignorance, but in experience. Yet, even within that context, it is crucial to recognize when the tide is turning. The data does not lie: the cedi has gained significant ground, and its upward trajectory is not merely a statistical anomaly. It is a direct consequence of
coordinated fiscal prudence, increased foreign inflows, and a resolute monetary stance by the Bank of Ghana.
Rather than holding on to outdated narratives of endless depreciation and economic doom, it is time for a collective mindset shift, one that allows us to embrace the new economic reality with both eyes open. The cedi’s resurgence has been hard-won, not gifted. It is the fruit of painful reforms, renewed investor engagement, and the quiet but relentless work of economic stewards who have steadied the ship during turbulent times. This is not a time for nostalgia or cynicism. It is a time for strategic optimism.
Let us therefore acknowledge this recovery, not with blind celebration, but with thoughtful appreciation. Let us leverage this window of opportunity to stabilize prices, attract investments, and create buffers for future shocks. Let us encourage businesses to recalibrate their cost assumptions and pass on the benefits of a stronger currency to the consumer. And above all, let us look ahead with renewed confidence not in the hope of a perfect economy, but in the assurance that progress is being made.
The market has spoken, and so has the Bank of Ghana. The cedi is not trembling and it is standing tall. Let the numbers, and not fear, guide our faith. In this new financial chapter, may we trade doubt for data, and hesitation for hope.
written By Augustine Paa Kwesi Baidoo
