- BoG Defends Managed Cedi Weakness as Dollar Demand Pushes Retail Rate Toward GH¢12
The Bank of Ghana has defended the recent weakening of the cedi as part of a managed exchange-rate adjustment, signalling that policymakers are prepared to tolerate limited depreciation rather than defend a fixed currency level as seasonal demand for dollars builds.
Governor Johnson Pandit Asiama said recent movements in the foreign-exchange market should not be interpreted as evidence that the central bank has lost control, arguing that allowing the currency to adjust can sometimes form part of a deliberate policy strategy.
“Sometimes it’s okay to allow the system to adjust; sometimes it’s deliberate policy to allow the cedi to depreciate a little bit,” Dr Asiama told capital-market participants at the Ghana Stock Exchange. “It’s all within the strategy.”
His comments come as the cedi has come under renewed pressure in recent weeks, partly driven by increased foreign-exchange demand associated with imports ahead of the Christmas trading season.
Some forex bureaux have been quoting the dollar close to GH¢12, widening the gap between retail-market pricing and the Bank of Ghana’s interbank reference rate.
Official Bank of Ghana data showed a weighted median exchange rate of GH¢11.5200 per dollar on September 17, with banks buying the US currency at GH¢11.5142 and selling at GH¢11.5258. The reference rate is calculated from spot transactions submitted by banks covering interbank activity and qualifying transactions with clients.
The divergence between the official reference rate and quotations at some forex bureaux provides an indication of the pressure building in parts of the retail market, where businesses and individuals seeking dollars can face wider spreads during periods of increased demand.
For the central bank, however, the policy objective is not necessarily to prevent the cedi from moving.
Ghana operates a flexible exchange-rate system under which the currency is expected to respond to supply and demand while the Bank of Ghana intervenes to contain disorderly conditions and excessive volatility.
That distinction is central to Dr Asiama’s message.
Attempting to hold the currency indefinitely at a particular level could require heavy foreign-exchange intervention and potentially weaken international reserves, while allowing gradual adjustment can help the market respond to changes in import demand, export receipts, remittances and international financial conditions.
The challenge is ensuring that depreciation remains orderly enough to avoid destabilising inflation expectations and business confidence.
The Bank’s latest monetary-policy reporting had already acknowledged renewed pressure on the cedi during 2026. Its July Monetary Policy Report said the currency came under intense pressure in May before recovering, with the Bank expecting foreign-exchange intermediation and remittance inflows to help moderate pressures over the medium term.
By July, the cedi had depreciated 7.9% against the dollar on a year-to-date basis, compared with a sharp appreciation during the corresponding period of 2025. The Bank nevertheless reported lower volatility during the first 140 transaction days of 2026 than during the comparable periods in the preceding four years.
The latest weakness therefore represents another test of whether the central bank can maintain that relative stability as seasonal demand intensifies.
For import-dependent businesses, even a controlled depreciation carries consequences.
Companies importing fuel, machinery, pharmaceutical products, industrial inputs and consumer goods require more cedis to purchase the same quantity of foreign currency when the exchange rate weakens. That can raise replacement costs, working-capital requirements and eventually consumer prices if businesses pass part of the additional expense through to customers.
The risk becomes greater when currency pressure coincides with other external shocks, particularly higher petroleum prices, because Ghana remains dependent on imported refined products and other dollar-denominated commodities.
The Bank is therefore attempting to balance two potentially conflicting objectives: allowing sufficient exchange-rate flexibility to prevent distortions while avoiding an uncontrolled depreciation that could feed back into inflation.
Headline inflation currently stands at 5%, while the central bank’s policy rate is 14%, according to the Bank’s published indicators.
That relatively low inflation environment gives policymakers more room than during previous episodes of severe currency depreciation, but the benefit could be eroded if exchange-rate pass-through becomes persistent.
The Bank has also continued adjusting the institutional framework around foreign-exchange trading. This week it issued guidelines governing FX forward auctions and intermediation through spot auctions, while maintaining rules requiring authorised brokers operating in the interbank market to receive central-bank approval.
Those measures form part of a broader effort to improve price discovery, liquidity and transparency within the formal FX market.
Dr Asiama’s intervention is therefore as much about confidence as exchange-rate mechanics.
Businesses that believe the currency is entering an uncontrolled decline can accelerate dollar purchases, potentially amplifying the very pressure they fear. Central-bank communication consequently becomes important in preventing modest movements from developing into broader expectations of sustained depreciation.
The Governor’s assurance is that the Bank remains prepared to manage those pressures while permitting the exchange rate to adjust where necessary.
The more consequential test will come over the remainder of the year.
Seasonal imports traditionally increase demand for foreign currency, while developments in commodity prices, export receipts and remittance inflows will influence supply.
Allowing the cedi to weaken modestly may be consistent with a flexible exchange-rate regime. But the distinction between managed adjustment and renewed instability will depend on how quickly the currency moves, whether retail and interbank rates remain broadly connected, and how much intervention is required to preserve confidence.
For the Bank of Ghana, the objective is therefore not to ensure that the cedi never depreciates. It is to make sure that when it does, the adjustment remains orderly enough to protect reserves, contain inflation and prevent temporary dollar demand from becoming a broader loss of confidence in the currency.
