Keypoints:
- Barclays warns Ghana’s cedi could weaken further on rate cut risks
- Fiscal expansion and dollar shortages add to the pressure
- A weaker cedi may fuel inflation and raise import costs
GHANA’S cedi faces renewed downward pressure, with Barclays warning the currency could weaken further if the Bank of Ghana begins easing interest rates while the government increases spending. The assessment adds to concerns that recent stabilisation may not last.
In its latest projection, Barclays noted that the cedi’s earlier resilience—helped by strong gold and cocoa earnings—has given way to renewed weakness as fiscal challenges build. According to the bank, any rate cuts this year could accelerate capital outflows and deepen the cedi’s slide.
Early gains unwinding
The cedi had started 2025 on a firmer footing, boosted by higher export revenues, relatively stable inflation, and a wave of optimism following Ghana’s successful debt restructuring programme. For several months, the local unit was among Africa’s better-performing currencies.
Yet by mid-year, those gains had faded. Dollar shortages, delayed donor inflows, and rising government expenditure ahead of policy rollouts eroded confidence. Analysts note that the cedi’s value is once again at risk of slipping into a cycle of depreciation, as has been the case in recent years.
Inflation risks and import strain
A weaker cedi has significant consequences for households and businesses. Import costs rise sharply when the currency falls, pushing up prices of fuel, food, and essential goods. Barclays cautioned that inflationary pressures, which had shown signs of easing, could resurface strongly if the cedi loses further ground.
Economists also warn that currency weakness makes it more expensive for Ghanaian firms servicing dollar-denominated loans, raising repayment burdens and eroding profitability. The banking sector, already exposed to bad loans after last year’s debt restructuring, could face fresh strain.
Africa’s currency struggles
Ghana is not alone in facing exchange rate pressures. Nigeria’s naira and Kenya’s shilling have also weakened this year as central banks balance inflation control with growth priorities. In Ghana’s case, the stakes are particularly high given its dependence on imported goods and the fragile confidence of investors following a historic economic crisis.
While commodity exports provide a buffer, the volatility of global gold and cocoa markets means Ghana’s currency outlook remains uncertain. Barclays’ warning suggests that unless the Bank of Ghana signals continued policy discipline, the cedi could face further selling pressure in the months ahead.
Looking ahead
Investors will watch closely for any sign of monetary easing by the Bank of Ghana. A premature cut in interest rates, combined with higher government spending, could confirm Barclays’ prediction of renewed depreciation. For now, the cedi remains under the shadow of fiscal risks and global headwinds, with the possibility of further losses looming.
