The Ghana Cedi (GHS) recently has witnessed some significant stability against the dollar and other foreign currencies.

Prior to this development, the local currency had been ranked among the worst performing currencies globally.

In October 2022, Bloomberg reported that Ghana’s cedi slumped to become the world’s worst-performing currency (that year) as investors continued to squeeze foreign capital to the west (West) African country before a deal with the International Monetary Fund (IMF).

On Monday, October 17, 2022 for instance, the currency of Ghana which is the world’s second-biggest cocoa producer, depreciated as much as 3.3%, before paring the loss to 11.2750 per dollar at 3:30 p.m in the capital Accra.

However, the currency has recently recorded some significant gains against other major currencies across the globe.

As of April 6, 2023, data from the Bank of Ghana indicated that the cedi is buying at 10.9245 per dollar and selling at 10.9355 per dollar. The cedi is also buying at 13.5890 per pound sterling and selling at 13.5964 per pound sterling. The currency is buying at 11.9380 per Euro as well as selling 11.9488 per Euro.

Here are eight possible factors that have contributed to the cedi’s appreciation.

Lower local demand for USD:

1. There is lower local demand for the US$ as a result of reduced global fuel prices. This means that fuel (Ghana’s biggest import) costs less in US$, thus, putting less pressure on the Ghana cedi.

2. There is also a reduced demand for US$ on imported goods evidenced by reduced activity at ports since January 2023.

USD depreciation against global currencies3. In 30 days, the dollar depreciated by 2.18 % against the Euro.

4. The USD has also depreciated by 3.34 % against the Yen.

5. Also, the USD depreciated by 4.83 % against the Pound.

Investors no more moving Cedi funds to USD

6. As a result of the the cedi’s relative stability, investors are no longer moving cedi funds to US$.7. DDEP has been concluded: On February 23, 2023, the Ministry of Finance announced the government's successful settlement and conclusion of its Domestic Debt Exchange Programme (DDEP) in respect of the GHS-denominated notes and bonds, E.S.L.A. Plc or Daakye Trust Plc. This was achieved on Tuesday, 21st February 2023 (the “Settlement Date”).

A statement issued by the Public Relations Unit of the Ministry said, “This successful result is a significant achievement for the Government in the implementation of the economic strategies of the post-COVID-19 Programme for Economic Growth (PC-PEG) during this current economic crisis.”

8. Expectation of IMF deal by May 2023: Government is also expected to reach a deal with the IMF by May 2023.