Cedi Decline Is A Natural Situation – Prof. Bokpin Explains

The recent weakening of the Ghana Cedi against major foreign currencies is not a sign of a collapsing economy but rather a natural adjustment, according to economist Professor Godfred Bokpin.

The University of Ghana Business School lecturer reassured Ghanaians that the situation is “not out of control” and urged the public to remain calm.

Prof. Bokpin explained that the Cedi’s earlier sharp appreciation was “aggressive” and had moved “far ahead of the recovery,” making a correction inevitable.

He described the current market behavior as a normal phase of economic dynamics, stressing that there is no cause for alarm.

He pointed out that the Cedi’s rapid gains in the first half of 2025 were unprecedented. By the end of June 2025, the currency had appreciated by 42.6% against the US Dollar, 30.3% against the British Pound, and 25.6% against the Euro.

This was a complete turnaround from the same period in 2024, when the Cedi depreciated by 18.6%, 17.9%, and 16.0% respectively.

Signs of Recovery

Provisional data from the Ghana Statistical Service suggests that the country’s economy is on a path to recovery. In the second quarter of 2025, the economy grew by 6.3%, up from 5.7% in the same period the previous year.

Prof. Bokpin noted that this growth is becoming “broad-based” and is no longer restricted to a handful of sectors.

The Information and Communication Technology (ICT) sector played a significant role, expanding by 21.3% and leading the overall growth.

However, Prof. Bokpin cautioned that while the numbers are encouraging, the recovery is still emerging from a “state of low productivity” and does not yet indicate a full “structural transformation” of the economy.

On inflation, Ghana has witnessed a remarkable downward trend. Inflation dropped from 23.8% in December 2024 to 11.5% by the end of August 2025, marking eight consecutive months of decline and the lowest rate since October 2021.

Prof. Bokpin described this as a “sharp deceleration” and credited effective fiscal policies implemented by the government for this achievement.

According to Prof. Bokpin, the weakening of the Cedi is partly due to predictable seasonal factors.

As the year approaches its peak spending period, businesses increase imports in preparation for the Christmas season, creating higher demand for foreign currency. At the same time, government spending patterns contribute to additional pressure on the currency.

He further noted that Ghana experiences periods of cash flow mismatches, where inflows and outflows fluctuate sharply, affecting the Cedi’s stability.

“It’s always very difficult to say the value of the Cedi is fixed. In a month, it could change. The dynamics are not static.”

He projected that by the end of the year, the exchange rate could hover around GHS 13.5 to the US Dollar, while some analysts predict it may reach GHS 14.

Market Distortions

Prof. Bokpin also expressed concern over the wide disparity between the interbank exchange rate, Forex Bureau rates, and black-market rates.

He urged the Bank of Ghana to take decisive steps to close these gaps, warning that such discrepancies create opportunities for speculative activities and undermine confidence in the financial system.

He emphasized that too much public focus on the exchange rate distracts from more critical economic fundamentals.

“Every now and then, if you look at discussions about the exchange rate, it tends to dominate our economic discourse more than anything else. That is not good enough.

Accordingly, he called for a shift towards discussions about strengthening the real sector of the economy.

Prof. Bokpin also highlighted that the Cedi’s aggressive appreciation earlier in the year had fueled speculative activity, which is now being corrected.

He commended the Bank of Ghana for “stepping strongly” to stabilize the currency and prevent further volatility.

While short-term pressures on the Cedi are expected, Prof. Bokpin remains optimistic about the medium-term outlook.

He believes that as the government continues to implement policies that promote fiscal stability and maintain a strong disinflationary trend, the currency will eventually stabilize.

He concluded by reiterating that the current dip in the Cedi’s value is a natural response to earlier rapid gains and part of a broader market correction, not an indication of economic failure.

“We have exited the peak of our crisis,” he said, adding that Ghanaians should maintain a sense of calm and focus on long-term structural reforms rather than short-term fluctuations.