Understanding the Rise of the Ghanaian Cedi: A Non-Political Explanation of Its Broad-Based Appreciation

The Ghanaian cedi (GHS) has recently made a surprising and strong comeback. It has appreciated against the U.S. dollar and other major international currencies like the euro and the British pound. This development has attracted attention and sparked debate across the country. While many politicians quickly take credit or shift blame, relying on them for honest and objective explanations is difficult. Many observers—including this writer—prefer to consult international financial institutions, independent analysts, the Bank of Ghana, and global market data to understand such trends.

Still, it is fair for the current National Democratic Congress (NDC) government to take credit for the cedi’s rise, as it is in charge and bears responsibility for national outcomes. As Niccolò Machiavelli, the first modern political theorist, rightly noted, the ruling government is always held accountable for what happens in the state. He described this principle as “Fortuna”—the unpredictable forces of chance, fate, and external conditions that shape political life. The results that unfold under its watch judge whether or not the government directly caused a development.

This article provides a non-political, balanced, and fact-based explanation of the cedi’s broad-based appreciation. It will explore the economic policies of the former New Patriotic Party (NPP) government and the current NDC administration. It will also examine the strategic role of the Bank of Ghana, the involvement of international institutions like the IMF and World Bank, and the influence of global factors such as trade tensions, gold prices, and cocoa exports. By breaking these down clearly, this article seeks to help readers understand why the cedi is gaining strength across the board.

1. Economic Management by the Last NPP Administration

The NPP administration implemented several long-term reforms to strengthen Ghana's macroeconomic foundation. Some of these efforts did not produce immediate results but have had significant delayed effects—what economists call "lagging effects." Key among these policies was the Gold for Reserves Program, launched by the Bank of Ghana under the NPP's leadership. The idea was to build Ghana's foreign reserves not through foreign borrowing, but by purchasing locally mined gold. This helped the country accumulate over 30 tonnes of gold by early 2025, boosting Ghana's ability to manage its currency without always needing to borrow dollars.

Additionally, the NPP government completed Ghana's first commercial gold refinery in August 2024. The refinery allowed Ghana to process gold locally, adding more value before export and reducing dependency on foreign refineries. About international cooperation, the NPP government also initiated negotiations with the International Monetary Fund (IMF), leading to the signing of a $3 billion Extended Credit Facility in 2023. Though painful, the fiscal controls and reforms demanded by the IMF created a path toward economic stability.

2. Lagging Effects of NPP Policies
Policies such as reserve building, and gold refinery investments take time to show results. The benefits of these decisions are only now being felt in 2025, even though the NPP is no longer in power. For example, the increase in gold reserves has made Ghana more resilient to currency shocks, while the new refinery has boosted export revenues. These long-term investments laid the foundation for the current Cedi appreciation. Credit, therefore, should not be viewed through a partisan lens—it is the natural result of well-structured economic planning and delayed outcomes.

3. Actions by the Current NDC Administration (2025–Present)

Since assuming office in January 2025, the NDC government has taken bold steps to stabilize the economy and consolidate gains. A key policy move was the removal of unpopular taxes such as the E-levy, betting tax, and the COVID-19 levy. These actions reduced the tax burden on individuals and businesses, helping to restore confidence in the economy. The government also expanded the gold purchase program that the NPP had started. It signed new agreements with nine additional mining companies to sell 20% of their gold output to the Bank of Ghana. This improved the country's gold stockpile and reduced the need to buy foreign currencies for trade. Additionally, the NDC administration implemented strict fiscal controls in line with the IMF agreement it inherited. These included better budget management, a freeze on non-essential spending, and increased transparency. Together, these steps enhanced investor trust in Ghana's economic direction.

4. Actions by the Bank of Ghana During NPP and NDC Administrations

The Bank of Ghana (BoG) has been the silent anchor behind the Cedi's rise. Under both administrations, it has acted with professionalism and foresight. During the NPP era, the BoG launched the Gold for Reserves Program. It began buying large quantities of gold, slowly building the country's ability to defend the Cedi without running into debt. The BoG also supported fiscal stability by tightening monetary policy and maintaining inflation targets. Under the NDC, the BoG took more decisive market actions. In April 2025 alone, it injected about $490 million into the foreign exchange market, providing liquidity and reducing speculative demand for the dollar. It also maintained high interest rates to attract investors and control inflation.

5. IMF and World Bank Support Across Both Governments

Ghana's collaboration with the International Monetary Fund (IMF) has significantly restored macroeconomic confidence. While the NPP government negotiated the $3 billion deal in 2023, the NDC government has followed through with policy reforms, audits, and spending discipline.

The World Bank has supported Ghana through grants and concessional loans targeting key sectors like education, health, and digital infrastructure. These inflows have added to Ghana's foreign currency reserves, helping to strengthen the Cedi.

6. External Factors: Trade Wars, Gold Prices, and Cocoa Exports

Beyond domestic policies, the Cedi has also benefited from favorable international conditions.

• The U.S.–China trade war, recently reignited by the Trump administration, has weakened the U.S. dollar globally. As a result, emerging market currencies like the Cedi have had more room to gain value.
• The price of gold has risen sharply, hitting over $3,400 per ounce. Since Ghana is a significant gold producer, this has boosted export earnings and added more dollars to the national reserve.
• Similarly, cocoa prices have increased, adding to Ghana's foreign income and improving the balance of payments.

These global trends have supported Ghana's efforts at home and contributed to the Cedi's rise across multiple foreign currencies—not just the dollar.

Conclusion: A Shared Effort, A National Success

The appreciation of the Ghanaian Cedi is not the result of one political party's genius or another's failure. It results from years of structured planning, disciplined execution, and favorable global conditions. The NPP laid the groundwork with gold reserves, international partnerships, and long-term investments. The NDC followed through with fiscal reforms, expanded gold strategies, and strengthened domestic policies. The Bank of Ghana remained consistent and professional under both governments, while the IMF and World Bank offered timely support. Global trade tensions, rising commodity prices, and intelligent market interventions fueled the Cedi's broad-based appreciation.