The Bank of Ghana’s September 2025 Monetary Policy Report confirmed that the weakening of the US dollar played a major role in stabilizing the Ghana cedi this year, as the dollar index recorded its sharpest decline in more than three decades.
According to the report, the US dollar index fell by about 11 percent during the first half of 2025 — its worst performance since 1991 — due to a slowing US labor market and expectations of interest rate cuts by the Federal Reserve.
The central bank noted that job creation in the United States had declined sharply, with unemployment rising to 4.3 percent by August. Markets were already anticipating rate cuts of between 25 and 50 basis points in September, with further easing expected in 2026. This shift prompted investors to move away from dollar-denominated assets.
At a press briefing on September 18, Bank of Ghana Governor Johnson Asiama announced that the cedi had appreciated by 21 percent against the dollar as of September 12, 2025, supported by a strong external sector and increased foreign reserves.
The report added that the dollar’s weakness provided some relief to emerging and developing economies, including Ghana, which had previously faced intense depreciation pressures. It also noted that more countries were beginning to settle oil, commodity, and trade transactions in currencies other than the US dollar, including the Chinese yuan.
The Bank of Ghana explained that when the dollar weakens, it eases pressure on smaller currencies since international trade and debt obligations priced in dollars become cheaper. This dynamic contributed significantly to the cedi’s relative stability during parts of 2025.
However, some local analysts argue that domestic factors played a greater role in the cedi’s resilience. They point to higher foreign exchange inflows from record gold prices, tighter monetary policy, and improved fiscal discipline as stronger influences than global currency trends. Gold prices surpassed $4,000 per ounce during 2025, significantly boosting Ghana’s export earnings and foreign reserves.
The central bank’s report acknowledged that multiple factors supported the cedi’s stability, including a prudent monetary policy stance, effective liquidity management, fiscal consolidation, the currency’s own appreciation, and improved food supply. Inflation, it added, dropped to 11.5 percent in August — the lowest level in four years.
Several international financial institutions, including Morgan Stanley, JP Morgan Asset Management, and Al Jazeera, also reported on the dollar’s historic decline in 2025, attributing it to tariff policies under the Trump administration, concerns over US fiscal sustainability, Federal Reserve policy uncertainty, and a weakening American labor market.