Ghana’s cedi has posted a surprising 19% surge over the past month, appreciating from GHS 15.50 to GHS 13.05 per US dollar — one of its steepest rallies in recent years.
But according to ABSA Bank’s latest “Ghana Market Insight” report, the rally may be too good to last.
The bank attributes the currency’s strength to surging gold prices, elevated cocoa earnings, and improved foreign reserves, now covering 3.0 months of imports — up from 1.8 months a year ago. This boost, fueled by geopolitical gold demand and Ghana’s stable cocoa output amid regional supply concerns, has helped stabilize the cedi.
However, ABSA cautions that the rally has overshot the fundamentals. Based on real effective exchange rate (REER) models, the cedi is now overvalued by nearly 20%, the most stretched in over a decade.
Lead Sub-Saharan Africa analyst Nikolaus Geromont warns that a pullback is likely, projecting a correction to GHS 14.00/USD by year-end.
While gold mines like Cardinal-Namdini and Ahafo South are expected to bolster reserves in 2025, the bank says a gradual depreciation is necessary to maintain export competitiveness and avoid jeopardizing recent economic stability.
The cedi is projected to average GHS 14.16/USD in 2025 — slightly stronger than the 2024 average, but more in line with purchasing power parity.
