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The Ghanaian cedi, after staging a remarkable 19% rally within a month to trade at GHS13.05 per US dollar, is projected to gradually weaken and end the year at around GHS14.19, according to Absa Bank’s latest “Ghana Market Insight” report released on May 12, 2025.
The cedi’s recent surge, largely driven by record-high gold prices, elevated cocoa values, and a rebound in Ghana’s foreign exchange reserves—has left the currency overvalued by nearly 20%, based on the real effective exchange rate (REER) models.
Absa’s lead Sub-Saharan Africa analyst, Nikolaus Geromont, explained that the rapid appreciation has pushed the cedi beyond sustainable levels. “We believe the cedi has rallied too aggressively. To restore competitiveness and purchasing power parity, the exchange rate is likely to reverse towards GHS14.00/USD by year-end,” he stated.
Ghana’s export revenues have seen significant boosts, with gold hitting over $3,300 per ounce due to global geopolitical tensions and increased demand for safe-haven assets. Cocoa prices have also remained high, spurred by poor harvest expectations in Ivory Coast, while Ghana benefits from more favorable weather conditions.
Additionally, Ghana’s foreign reserves now cover three months of imports and improvement from 1.8 months a year ago thanks to the Bank of Ghana’s gold accumulation strategy and the operations of the newly established Ghana Gold Board.
Despite the ongoing optimism, Absa cautions that the current strength of the cedi may be unsustainable if not corrected. The report warns that prolonged overvaluation could hurt export competitiveness.
Looking ahead, the anticipated launch of new gold mines such as Cardinal-Namdini and Ahafo South is expected to provide further support for Ghana’s reserves and export earnings, aiding economic stability even as the cedi adjusts.
Absa forecasts the cedi will average GHS14.16 to the dollar for 2025 stronger than the 2024 average of GHS14.50 but slightly weaker than current levels as market conditions normalize.
