Cedi’s Brief Recovery Masks Growing Dollar Supply Crisis

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Ghana’s cedi has staged a marginal recovery against the US dollar, but beneath the latest improvement lies a growing foreign exchange imbalance that could push the local currency towards GH¢12 if mounting pressures persist.

The Bank of Ghana’s interbank reference rate for October 9, 2026, placed the dollar at GH¢11.7741 for buying and GH¢11.7859 for selling, producing a midpoint of GH¢11.7800. This represents a slight improvement from GH¢11.83 recorded on October 8, offering temporary relief after weeks of mounting depreciation pressure.

However, the recovery has done little to ease concerns about the currency’s underlying position. The cedi traded at approximately GH¢11.69 at the end of September and around GH¢11.48 in mid-September, indicating that the broader depreciation trend remains intact.

The latest movements suggest that Ghana’s foreign exchange market is struggling to balance available dollar supplies against the growing needs of businesses, particularly companies operating in the energy and import sectors.

Although the cedi has recovered slightly from the previous session, the currency has depreciated by approximately 1.2 per cent against the dollar in about one week.

The movement from GH¢11.48 in mid-September to around GH¢11.79 represents a roughly 3 per cent increase in the dollar’s cedi price. Measured in terms of the cedi’s dollar value, the local currency has lost approximately 2.96 per cent over the same period.

The sequence of exchange rates, from GH¢11.48 to GH¢11.57, GH¢11.69, GH¢11.80 and now GH¢11.79, illustrates how the currency has gradually surrendered ground.

Market analysts have identified the GH¢11.70 to GH¢11.80 range as an important escalation zone. With the cedi now trading within that band, attention is shifting towards whether the currency can establish stability or slide further towards GH¢11.90 and GH¢12.

Unlike sudden currency shocks that can trigger panic among businesses and investors, Ghana’s depreciation has been relatively gradual. Nevertheless, a sustained decline can create significant uncertainty for importers, manufacturers and companies whose operations depend heavily on foreign currency.

One of the most pressing threats to the cedi is the rising cost of energy imports.

Brent crude settled at US$102.79 per barrel on October 9 following a volatile trading session. Prices eased slightly after the International Energy Agency agreed to accelerate the release of emergency oil stocks, helping to counter concerns about supply disruptions associated with the Iran war.

The IEA indicated that completing previously announced releases more quickly could bring approximately 100 million barrels of oil to the market. The agency is prioritising diesel supplies as refinery damage and disruptions to tanker movements continue to drive refined petroleum prices higher.

Ghana remains particularly exposed because it imports substantial quantities of refined petroleum products, including petrol, diesel, aviation fuel and liquefied petroleum gas.

When these products become more expensive internationally, oil marketing companies and bulk distributors must secure additional dollars to finance their purchases. Even if import volumes remain unchanged, higher prices can increase the total foreign exchange required to meet domestic fuel demand.

The pressure can spread beyond the energy sector, intensifying competition for dollars among businesses and adding to the strain on the interbank market.

Moreover, falling crude prices may not immediately provide relief if refinery margins, freight charges, insurance premiums and supply chain disruptions continue to keep refined fuel costs elevated.

The pressure on the cedi extends beyond rising oil prices. Traders have reported that dollar requirements from commerce and energy-related businesses are exceeding available interbank supplies, while foreign exchange inflows from extractive-sector companies have moderated.

Bank of Ghana foreign exchange auctions during September reportedly attracted demand exceeding three times the amount of dollars offered. This suggests that businesses and other market participants are seeking substantially more foreign currency than the central bank is prepared to supply through those auctions.

The retail market is also reflecting the strain.

Forex bureaux are selling dollars at approximately GH¢12.30, compared with the official interbank selling rate of GH¢11.7859. The difference represents a premium of roughly 3.8 per cent.

Although retail exchange rates do not automatically determine the official market rate, a persistent gap can indicate tighter access to foreign currency for individuals, travellers and smaller businesses.

The consequences could extend to import costs, business planning and consumer prices if depreciation continues to increase the cedi cost of internationally traded goods.

Recent developments in Zambia demonstrate how quickly concentrated demand for dollars can destabilise an African currency.

The Zambian kwacha plunged by as much as 6 per cent on October 6, marking its largest intraday decline in more than three years. The currency briefly touched ZMW21 to the dollar, its weakest level since January, before recovering to approximately ZMW19.84.

The sharp movement followed increased dollar purchases by oil marketing companies after special currency exemptions for energy importers expired.

South Africa’s rand has also weakened amid a stronger dollar and elevated oil prices. The country, which imports most of its fuel, is facing regulated petrol price increases of as much as 12 per cent, alongside wholesale diesel price increases of about 10 per cent.

Uganda’s shilling has similarly faced pressure from energy and merchandise-import demand, while Nigeria and Kenya have remained comparatively stable.

These developments highlight the importance of foreign exchange reserves, export earnings, market liquidity and central bank intervention in determining how individual economies withstand external shocks.

Ghana’s efforts to increase domestic crude refining could eventually reduce some of the country’s exposure to imported petroleum products.

Tema Oil Refinery and Sentuo Oil Refinery have started receiving domestically produced crude, while Tullow Oil has opened commercial sales from the Jubilee and TEN fields to Ghanaian refineries.

A stronger domestic refining industry could reduce certain freight and insurance expenses, retain more refining margins locally and shorten petroleum supply chains.

However, local refining will not eliminate the currency risk. Crude oil remains priced against international benchmarks, while refiners still need substantial working capital. Finished petroleum products will also remain sensitive to movements in the cedi-dollar exchange rate.

The immediate challenge is to strengthen foreign exchange inflows, improve interbank liquidity and ensure that central bank interventions are carefully calibrated to prevailing market conditions.

Ghana’s foreign exchange outlook remains under pressure, with the next critical threshold at GH¢11.90 to GH¢12 per dollar.

A sustained move into that range, particularly alongside continued oversubscription of foreign exchange auctions and a widening retail premium, would signal a more serious deterioration in the currency outlook.

The cedi’s marginal recovery offers a brief reprieve, but the underlying dollar imbalance remains unresolved. Unless foreign exchange supply improves or corporate demand eases, Ghana could face renewed pressure on its currency, with consequences for fuel costs, import prices and broader economic stability.

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