‘Cedi Has Rallied Too Aggressively’, Says Absa Bank Research

‘Cedi Has Rallied Too Aggressively’, Says Absa Bank Research

The Cedi has experienced a sharp appreciation against the US dollar over the past month, strengthening by 19% from GHS15.50 to GHS13.05 per dollar – an appreciation by the local currency that Absa Bank describes as “too aggressive.”

According to the bank’s latest research report, the Cedi’s recent rally has been buoyed by increased foreign exchange support from the Bank of Ghana (BoG), improved market confidence, and stronger-than-expected export receipts largely from gold and cocoa exports.

“Following two months of stability at 15.50/USD, the cedi has rallied by 19% over the past month to 13.05/USD currently. We believe the rally was fuelled by a combination of buoyant market confidence and increased FX support from the BoG,” Absa noted.

“At these levels, we believe the cedi has rallied too aggressively,” Absa added.

The appreciation, the report said, comes on the back of surging gold prices and elevated cocoa prices, both of which have translated into strong export earnings. These inflows have significantly boosted Ghana’s official gross reserves, now at a multi-year high.

Ghana’s net international reserves, according to the BoG’s latest Summary of Economic and Financial Data, have increased to 3.0 months of import cover, up from 1.8 months a year earlier. Absa attributes part of this reserve growth to the BoG’s strategic shift toward gold accumulation over fiat currencies.

Additionally, the establishment of the Ghana Gold Board (GoldBod) has enabled the government to exercise greater control over gold trade, thereby channeling more export receipts into official reserves.

“Looking ahead, reserves should be supported by a healthy current account surplus,” Absa stated, projecting a current account surplus of 5.1% of GDP in 2025, up from 4.3% in 2024.

The bank further noted that favourable rainfall patterns in Ghana have supported a rebound in cocoa output, especially when compared to volatile weather conditions in neighbouring Ivory Coast, where harvests are expected to decline. Ghana’s gold output is also expected to rise in 2025, with new mines such as Cardinal-Namdini and Ahafo South set to commence production.

Meanwhile, the global rally in gold prices — recently hitting all-time highs of around USD3,300 per ounce — continues to support Ghana’s export earnings and reserve position, making gold a key pillar of macroeconomic stability in the near term.