The Ghana cedi experienced a notable depreciation against the US dollar in the interbank market during the first five months of 2026, shedding approximately 8.4% of its value. This marks a steeper decline compared to the 6.6% depreciation observed over the same period in the previous year, according to data from the Bank of Ghana.
Economic Context: The Cedi’s Performance in Early 2026
Data released by the Bank of Ghana in its May 2026 Summary of Economic and Financial Data reveals the extent of the cedi’s slide. By May 2026, the local currency was trading at GH¢11.41 against one US dollar. This contrasts sharply with the GH¢10.28 rate recorded in May 2025, highlighting a significant year-on-year weakening.
The depreciation was not uniform throughout the period. In January 2026, the cedi lost 4.6% of its value against the dollar. February saw a slight improvement, with a depreciation of 2.2%. However, the downward trend resumed in March and April, with the cedi depreciating by 5.0% and 6.6% respectively.
Divergence in Retail Market
Interestingly, the retail market presented a different picture. Since January 1, 2026, the local currency has shown resilience, gaining approximately 1.67% against the US dollar in forex bureaus. Currently, it is trading at GH¢12.10 to one US dollar in this segment.
The cedi’s weakness was also evident against other major currencies. In the interbank market in May 2026, it depreciated by 7.5% against both the British pound and the Euro. This broad-based depreciation indicates a widespread challenge for the Ghanaian currency against key international trading partners.
Factors Driving the Depreciation
Analysts largely anticipated the cedi’s performance, attributing the downturn to a combination of sustained import demand and cautious foreign exchange supply conditions. Sentiment has also been negatively influenced by recent concerns regarding the financial position of the Bank of Ghana.
The persistent demand for imports, coupled with a constrained supply of foreign currency, creates an environment where the cedi struggles to maintain its value. This imbalance between supply and demand for dollars is a critical factor impacting the exchange rate.
Expert Perspectives and Future Outlook
While the current trend is concerning for the Ghanaian economy, there is an expectation of improvement. The performance of the cedi is anticipated to strengthen once the Board of the International Monetary Fund (IMF) approves Ghana’s sixth review under the Extended Credit Facility (ECF) program. Such approval often signals confidence in a country’s economic management and can unlock further financial support, thereby stabilizing the currency.
The outcome of the IMF review is therefore a critical event to watch. Positive developments could lead to increased foreign exchange inflows and improved investor confidence, which are essential for reversing the current depreciation trend. The market will be closely monitoring the timeline and outcome of this review, as it holds significant implications for the stability of the Ghanaian cedi in the coming months.
Leave a Reply