Cedi rebounds strongly as October rally erases third-quarter losses

Ghana’s local currency, the cedi, has made an impressive comeback in October 2025, recording a sustained appreciation against the U.S. dollar that has effectively erased all the losses it suffered in the third quarter of the year.

According to data from Bloomberg News and the World Bank, the cedi depreciated by about 14% during the third quarter, slowing its earlier strong performance that had seen it gain more than 40% by the end of July. By September’s close, its appreciation had dropped to around 21%.

However, fresh figures from commercial banks now show that the cedi’s year-to-date appreciation stands at 37%, meaning it recovered nearly 16% in just the first two weeks of October. This remarkable surge has restored market confidence and reversed the depreciation recorded between July and September.

In what analysts describe as one of the sharpest weekly rallies in recent history, the cedi appreciated by 9.5% against the dollar between October 13 and 17 alone — a development many consider a reflection of recent monetary policy reforms.

Monetary Policy and Market Dynamics Behind the Rally

Market observers attribute the cedi’s renewed strength to a combination of policy interventions, improved liquidity, and disciplined market behavior.

Sources within the Bank of Ghana (BoG) indicate that the central bank has scaled down its direct dollar interventions, allowing the interbank market to function more freely. Despite this, the market remains “very liquid,” suggesting a healthy balance between supply and demand.

A major contributor to this stability has been the BoG’s revision of its foreign exchange intervention strategy — shifting from weekly forex auctions to spot sales for commercial banks. This move, according to the Ghana Association of Banks, has improved transparency and responsiveness in the market.

Its Chief Executive, John Awuah, told Joy Business that the cedi’s rebound reflects “recent market developments,” particularly the central bank’s review of the Net Open Position (NOP) for commercial banks. This policy, he said, has enhanced banks’ ability to manage their forex holdings more effectively.

Market analysts further point to a blend of tight fiscal and monetary policies, increasing export revenues, and improved investor confidence as key factors underpinning the cedi’s performance. With ongoing reforms, many believe the rally could extend into the final quarter of the year.

Trading Data Reflects Broad-Based Gains

Checks by Joy Business show that as of mid-October, some commercial banks were selling the U.S. dollar at around GH¢10.95 for retail transactions. On the interbank market, rates ranged between GH¢10.70 and GH¢10.85, signaling a significant narrowing of spreads.

The appreciation trend has also filtered through to the forex bureau market, where rates dropped to between GH¢12.00 and GH¢12.40 per dollar as of October 12, 2025 — further evidence of strengthened confidence in the cedi.

Gold-Backed Forex Initiative Boosts Confidence

The October rally follows the announcement by Bank of Ghana Governor Dr. Johnson Asiama that the central bank would begin foreign exchange intermediation under the Domestic Gold Purchase Programme this month.

The BoG plans to sell up to $1.15 billion in foreign exchange through twice-weekly, price-competitive spot auctions open to all licensed banks.

Dr. Asiama explained that the initiative is designed to deepen Ghana’s interbank FX market, promote price discovery, and reduce volatility while ensuring fair and transparent market operations.

He reiterated that the ultimate goal of the initiative is to stabilize the exchange rate, maintain a level playing field, and ensure sustainable liquidity in the financial system.

Outlook

With the cedi regaining lost ground and the Bank of Ghana maintaining a proactive stance on market regulation, analysts forecast a relatively stable exchange rate environment heading into the final months of 2025.

However, they caution that sustaining the rally will depend on continued policy discipline, steady export inflows, and investor confidence in the broader macroeconomic framework.

For now, the cedi’s October performance stands as one of the strongest recoveries in Ghana’s recent financial history, rekindling optimism in the domestic currency market.