Cedi’s 29% rebound gives way to 8.1% fall in 2026 – World Bank

The Ghana cedi depreciated by 8.1% against the US dollar in the first six months of 2026 after recording an appreciation of about 29% during 2025, according to the World Bank.

The Bank attributed the renewed decline largely to increased demand for foreign currency from the energy sector and dividend payments by some private companies.

It said the reversal occurred despite continued foreign exchange inflows supported by Ghana’s trade surplus, highlighting the currency’s exposure to corporate outflows and changing demand.

In its 10th Ghana Economic Update, the World Bank credited interventions by the Bank of Ghana with helping to improve foreign exchange market conditions and support the cedi’s turnaround in 2025.

The cedi’s real effective exchange rate appreciated by 28% during the year, while its nominal effective exchange rate rose by 26%, the report said.

An external sector assessment found that Ghana’s current account and exchange rate were broadly consistent with the country’s economic fundamentals and desirable policies, taking account of its position as a commodity exporter and the scale of the currency’s appreciation.

But the World Bank said the sharp rise in the cedi’s value during the second quarter of 2025 also created exchange rate uncertainty.

That uncertainty contributed to a widening gap between the rates available in the official and parallel foreign exchange markets.

The parallel-market premium averaged 12.4% between June and December 2025, signalling that imbalances remained despite the cedi’s broader recovery.

In response, the Bank of Ghana introduced a Foreign Exchange Operations Framework in November 2025.

The framework was designed to make the central bank’s foreign exchange operations more transparent, strengthen the accumulation of international reserves and limit excessive exchange rate volatility.

The Bank of Ghana has described the cedi’s subsequent movement as normal volatility under Ghana’s managed floating exchange rate system.

According to the central bank, the new foreign exchange framework provides an anchor for its market operations.

The gap between the official and parallel-market exchange rates has since narrowed, the World Bank said.

The premium averaged 8.1% in the year to June 2026, compared with an average of 12.4% between June and December 2025.

Although this represents an improvement, the World Bank said the premium remained elevated, suggesting that pressure within the foreign exchange market had not been fully resolved.

The Bank said the cedi’s appreciation had helped reduce imported inflationary pressures and improve Ghana’s wider macroeconomic environment.

However, the depreciation recorded in 2026 demonstrated the currency’s continuing sensitivity to seasonal foreign exchange demand and corporate payments leaving the country.

Its assessment indicates that sustaining the cedi’s stability will require continued policy credibility, stronger reserve buffers and effective management of pressure in the foreign exchange market.

This means the Bank of Ghana faces the challenge of limiting disruptive currency swings while maintaining sufficient reserves and meeting legitimate demand for foreign exchange.

The World Bank’s findings also suggest that the headline exchange rate alone does not provide a complete picture of market stability. The persistent difference between official and parallel-market rates remains an important measure of unresolved demand and supply pressures.