Global Dollar Weakness: A Window of Opportunity for Emerging Markets Like Ghana
In 2025, the global financial landscape is undergoing a significant transformation as the U.S. dollar (USD) experiences one of its sharpest declines in decades. The dollar index has dropped approximately 9% year-to-date, marking its worst start since 1989. This depreciation, driven by a U.S. economic slowdown, policy uncertainty, and central banks’ diversification away from the dollar, presents a unique opportunity for emerging markets. Ghana exemplifies this potential, leveraging strategic policies to strengthen its currency and economy.
Drivers of Dollar Weakness
The U.S. dollar’s decline is rooted in several interconnected factors. The U.S. GDP growth slowed to 1.8% in Q1 2025, reflecting reduced economic activity. Concurrently, debates over the U.S. involvement in global institutions like the International Monetary Fund (IMF) and restrictive trade policies have created an air of uncertainty, further eroding investor confidence.
Central banks worldwide have accelerated efforts to diversify their reserves, leading to a notable increase in gold holdings. Ghana has played a critical role in this trend. By March 2025, the Bank of Ghana’s gold reserves had tripled over two years, reaching 31.01 tonnes.
Ghana’s Economic Playbook
Ghana’s proactive economic policies have positioned it as a standout in a volatile global economy. Notably, the government’s debt restructuring efforts have played a pivotal role. While Ghana’s Eurobond yields decreased following a restructuring program. Additionally, Fitch Ratings upgraded Ghana’s credit rating to ‘CCC+’ in October 2024, signaling improved investor sentiment.
IMF support has been instrumental in stabilizing the economy. The $3 billion Extended Credit Facility, approved in 2023, has underpinned fiscal reforms, reducing inflation from a staggering 45% in 2023 to 22.4% in March 2025. Foreign reserves also rose to $8.98 billion, covering four months of imports.
The government’s industrial policy, spearheaded by the One District, One Factory (1D1F) initiative, has significantly boosted local production. Since its inception, the program has created over 150,000 jobs, showcasing the impact of targeted economic interventions.
The Cedi’s Performance
The Ghanaian cedi has emerged as one of the best-performing currencies in 2025, appreciating by 6.1% against the U.S. dollar in April alone, moving from 15.31 GHS/USD to 14.38 GHS/USD. Over the past six months, the currency has gained 10%, reflecting a broader trend of improving economic fundamentals.
This rally has been supported by robust remittance inflows, which increased by 18% in Q1 2025 to reach $4.7 billion. Additionally, higher gold prices and export earnings have strengthened Ghana’s balance of payments, further bolstering the cedi.
Investor Appeal
Ghana’s improving economic stability has enhanced its attractiveness to investors. The Bank of Ghana’s monetary policies have maintained treasury yields at competitive levels with inflation rate of 22.4%.
The agricultural sector remains a cornerstone of the economy, with cocoa exports projected to rise significantly in the 2024/2025 season. Meanwhile, the fintech sector is experiencing remarkable growth. These trends signal diversification and resilience within Ghana’s economy.
Persistent Challenges and Opportunities
Despite these achievements, Ghana still faces several hurdles. Imports constitute approximately 40% of GDP, leaving the economy vulnerable to global price fluctuations. Inflation, though reduced, remains above the Bank of Ghana’s target range of 6-10%, with food inflation at 26.5% and non-food inflation at 18.7% in March 2025.
To sustain its growth trajectory, Ghana must continue to prioritize export diversification and reserve accumulation. Cocoa and gold exports remain vital, but investment in other high-potential sectors, such as technology and renewable energy, could drive long-term growth.
Lessons for Emerging Markets
Ghana’s response to the weakening dollar offers valuable lessons for other emerging markets. By leveraging its natural resource endowments, embracing fiscal reforms, and fostering investor-friendly policies, the country has turned a global challenge into an economic opportunity. As the financial world grows increasingly multipolar, Ghana’s journey underscores a key truth: with strategic vision and effective execution, emerging markets can thrive amid uncertainty.
About the Author
Kofi Busia Kyei is a finance professional with extensive experience in investment and wealth management, pension fund oversight, and strategic leadership. Known for leveraging advanced technologies like Artificial Intelligence, he is a published thought leader committed to delivering innovative solutions in financial services. He works with Merban Capital as a Pension Funds Manager and serves as an executive with the Young Investors Network.
Disclaimer: The views expressed in this article are the author’s own and do not necessarily represent the positions of any affiliated organizations. All data is based on publicly available sources at the time of publication.
Sources: Bank of Ghana, IMF Reports, Fitch Ratings, Ghana Statistical Service, Citi Newsroom.
