Cedi’s Climb: Domestic Policy Win or Fallout from Global Trade Tensions?

Ghana’s cedi has seen an unexpected surge in recent weeks, sparking debate among economists and traders alike—are local policy reforms finally bearing fruit, or is the gain merely a side effect of shifting global trade dynamics? While the Bank of Ghana’s tightened monetary stance and improved export receipts have played a role, some analysts point to weakening currencies in rival markets and geopolitical trade realignments as the real catalysts. The cedi’s resilience may be welcome, but its true driver remains a contested narrative with implications for long-term currency strategy

In the first five months of 2025, Ghana’s cedi (GH₵) has outperformed many of its regional counterparts, showing impressive gains against the US dollar (USD). As of May 8, 2025, the cedi stood at GH₵13.19, compared to GH₵15.00 at the start of the year. This substantial recovery has raised the question: is the cedi’s remarkable performance primarily due to global external factors such as trade wars and tariff hikes, or can Ghana’s local economic strategies be credited for the currency‘s resilience?

While global trends certainly play a role, Ghana’s recovery can largely be attributed to a combination of prudent fiscal management, strong export performance (especially from gold and cocoa), and strategic interventions by the Bank of Ghana. Efforts to stabilize inflation, boost foreign exchange reserves, and encourage investment are among the local strategies that have helped bolster the cedi.

Regional Currency Comparisons: A Broader Perspective

Nigeria: Naira Struggles Amid Economic Pressures

The Nigerian naira (NGN) has faced considerable pressure, marked by a sharp depreciation throughout the first five months of 2025. Beginning at ₦1535.00 per USD in January, the naira saw a gradual but steady decline, peaking at ₦1644.00 in mid-April. As of May 8, the rate had stabilized at ₦1608.10. This weakening of the naira is attributed to persistent inflationary pressures, fluctuations in oil prices, and Nigeria’s over-reliance on oil exports, which continue to challenge the stability of the national currency. Despite some fluctuations, the naira’s value remains well below its starting position at the beginning of the year, reflecting deeper structural challenges within the economy.

Analysis of Nigerian Naira Exchange Rates: January to May 2025

The Nigerian naira has experienced considerable fluctuations against the US dollar over the first months of 2025. At the start of January 2025, the exchange rate was ₦1535.00 (buying rate) on January 2. The rate increased gradually, peaking at ₦1555.00 on January 21, 2025. This marked a steady depreciation of the naira.

By early April, the rate reached a significant low at ₦1644.00, signaling a sharp decline in the value of the naira. A slight recovery followed as the exchange rate hovered around ₦1600, maintaining a level above the ₦1500 threshold. As of May 8, 2025, the exchange rate stood at ₦1608.10, indicating a modest stabilization but still far from the stronger rates seen at the beginning of the year.

The Gambia: Gradual Appreciation, Yet Limited Movement

The Gambian dalasi (GMD), in contrast, has experienced gradual appreciation but within a narrower range. Starting at 69.2 GMD per USD in January, the dalasi gradually moved to 71.42 GMD by May 8, reflecting a mild depreciation of about 3%. The dalasi’s movement has been relatively less volatile compared to the naira and cedi, signaling a more stable yet subdued performance. Though the dalasi has shown improvement over the year, it has lacked the sharp momentum seen in Ghana’s cedi, highlighting a period of steady but restrained growth in the Gambian economy.

Analysis of Gambian Dalasi Exchange Rates: January to May 2025

The exchange rate of the Gambian dalasi against the US dollar has gradually appreciated since the start of the year, with minor fluctuations along the way. The rate hovered around 70 GMD per USD for much of January and February, but rose steadily in March and continued to rise in April and May, peaking at 71.65 GMD in mid-April. By May 8, 2025, the exchange rate was recorded at 71.42 GMD.

The dalasi showed a steady, albeit slow, improvement against the US dollar. From a range of 69.2 GMD in January, the gradual upward movement continued into May, stabilizing within the low 71 GMD range. However, the GMD’s movement has been less dramatic than that of other regional currencies, showcasing moderate but consistent growth.

Liberia: A Steady Decline of the Liberian Dollar

The Liberian dollar (L$) has been consistently depreciating over the past months, from L$198 at the start of January to L$201.07 by May 8, representing a 1.5% decline. Despite the more modest rate of decline compared to the Nigerian naira, the Liberian dollar has shown no significant recovery, reflecting Liberia‘s continued economic challenges. The import-heavy economy and dependence on external goods continue to weigh down the value of the Liberian dollar, indicating ongoing struggles with economic stabilization.

Analysis of Liberian Dollar Exchange Rates: January to May 2025

From January to May 2025, the exchange rate between the Liberian dollar (L$) and the US dollar exhibited a clear trend of depreciation, with the value of the Liberian dollar continuously rising against the US dollar. In January 2025, the exchange rate started relatively stable at around L$198 for buying and L$199.70 for selling. However, the rates began to climb steadily through the months, reflecting a continuous weakening of the Liberian dollar.

By February, the exchange rates had risen further, with the buying rate moving between L$198.03 and L$198.54, and the selling rate between L$199.73 and L$200.43. By May 2025, the buying rate had increased slightly to L$198.18, and the selling rate had risen to L$201.07, indicating a continued depreciation of the Liberian dollar over the months.

Local Efforts Outweigh External Factors

When analyzing the performance of Ghana’s cedi against the backdrop of the regional currency landscape, it is clear that Ghana’s local economic strategies have played a far more significant role in its currency’s appreciation than external trade dynamics. While global trade wars and weakening dollar trends may have contributed to some extent, the strength of the cedi is a testament to the country’s prudent fiscal management, strong export performance, and successful economic policies.

As the year progresses, Ghana’s economy seems well-positioned to maintain this positive trend, bolstered by its continued efforts to stabilize inflation, encourage investment, and boost foreign exchange reserves. While the broader global picture may have an impact, Ghana’s currency performance suggests that local economic reforms and a strategic approach to growth are key to its continued success.

Last Updated on May 9, 2025 by samboad