The US$10 Billion Question: How Ghana Stabilised the Cedi in 2025 – Life Pulse Daily

Introduction

In 2025 Ghana faced a rare monetary dilemma: a sudden influx of foreign exchange (FX) that threatened to over‑appreciate the Ghanaian cedi. Rather than allowing the currency to appreciate unchecked, the Bank of Ghana deliberately intervened in the foreign exchange market to stabilise the cedi. The result was an estimated US$10 billion of intervention that reshaped reserve levels, trade dynamics, and macro‑economic policy. This article unpacks the mechanics behind the FX intervention, explains why the numbers matter, and offers practical take‑aways for policymakers, investors, and the general public.

Key Points

Background

Ghana’s currency stabilisation story did not emerge in isolation. By the end of 2024 the Ghanaian cedi had depreciated sharply, prompting the government to seek a US$3 bn IMF programme and to negotiate a foreign‑exchange liberalisation framework. The subsequent months saw a surge in commodity exports, especially gold, whose price rally boosted export earnings dramatically.

At the same time, global capital flows turned favourable. Remittances from the Ghanaian diaspora remained robust, and foreign direct investment (FDI) in the mining and oil sectors increased. These developments created a large FX supply that the central bank could potentially use to intervene in the market.

Historically, Ghana has used FX interventions sparingly, preferring to let market forces determine the exchange rate. However, the magnitude of the 2025 inflow forced a reassessment: allowing the cedi to appreciate unchecked could have hurt export competitiveness and created inflationary pressures when imports became cheaper.

Analysis

How FX Intervention Works

FX intervention is essentially the sale of foreign currency by the central bank in exchange for the domestic currency. In Ghana’s case, the Bank of Ghana sold part of its foreign‑exchange holdings to absorb excess supply, thereby supporting the cedi and preventing rapid appreciation. The basic accounting identity used by analysts is:

FX Intervention = FX Inflows – Change in Reserves

When inflows are large but reserves increase only modestly, the residual amount is interpreted as the intervention‑driven purchase of domestic currency.

Reserve Build‑Up and Its Limits

Between December 2024 and September 2025, Ghana’s official reserves grew from US$9.11 bn to US$11.60 bn, a net addition of US$2.30 bn. This modest rise stands in stark contrast to the estimated US$16.95 bn surplus generated after covering import costs. The discrepancy indicates that the bulk of the surplus was not retained as reserves but was instead used to stabilise the cedi.

Several factors limit the amount of FX that can be absorbed into reserves:

• Encumbered assets: Certain foreign assets are pledged as collateral for external debt.
• Gold valuation: Gold holdings are re‑valued periodically, affecting the reported reserve figure.
• Petroleum and heritage funds: Legal mandates restrict the use of revenues earmarked for specific sectors.

A typical adjustment factor of 30‑35 % is applied to reflect these constraints. Using a midpoint of 32 % yields an estimated intervention of US$10 bn (US$14.65 bn × 0.68 ≈ US$9.96 bn).

Export Performance as a Source of FX

Export earnings are the primary driver of foreign‑exchange inflows. Ghana’s export basket is heavily weighted toward commodities:

• Gold: US$15.25 bn (65 % of total exports)
• Cocoa: US$2.82 bn
• Oil: US$2.20 bn
• Other goods: US$3.06 bn

These revenues not only bolster the balance of payments but also provide the raw material for potential intervention when the central bank decides to sell dollars.

Remittances and Capital Flows

Private transfers—commonly known as remittances—remained a stable source of FX, totaling roughly US$6.5 bn over the first ten months of 2025. In addition, net non‑reserve capital inflows contributed about US$1.92 bn. Together, these streams added roughly US$8.42 bn to the FX pool, underscoring the importance of diaspora earnings and portfolio investment in Ghana’s external balance.

Import Expenditure and the Surplus Equation

Imports during the same period reached US$14.80 bn, with oil imports accounting for US$4.40 bn and non‑oil imports for US$10.40 bn. Subtracting import spending from total FX inflows yields a surplus of US$16.95 bn. This surplus represents the “extra” foreign currency that could, in theory, be used for any purpose—saving, investment, or intervention.

Because reserves only rose by US$2.30 bn, the remainder—approximately US$14.65 bn—was effectively purchased back into the market to prop up the cedi. After adjusting for encumbrances, the final estimate lands close to US$10 bn, matching the article’s headline claim.

Exchange‑Rate Response

The USD/GHS exchange rate tells the story of appreciation. From a January 2025 level of 15.30 cedis per dollar, the rate fell to 10.28 by May 2025, before modestly rebounding to 12.42 by September. This 33‑43 % appreciation reflects the direct impact of the central bank’s FX intervention and the broader market perception of a more stable cedi.

Why This Matters for Policy

Such a substantial intervention cannot happen without a supportive environment:

• Portfolio inflows must be open and liquid.
• Current‑account liberalisation is required to allow smooth import‑export transactions.
• Sufficient FX supply must exist to make the intervention credible.

In Ghana’s case, the combination of robust export earnings, steady remittances, and prudent reserve management created the conditions for an intentional stabilisation effort rather than a passive market outcome.

Legal and Regulatory Context

All foreign‑exchange actions by the Bank of Ghana are governed by the Bank of Ghana Act, 2002 (Act 612), which mandates that the central bank maintain monetary stability and ensure the integrity of the financial system. Section 30 of the Act empowers the Bank to intervene in the foreign‑exchange market to “smooth out excessive volatility” and “protect the international value of the cedi.”

While the Act does not prescribe a specific methodology, it requires that any intervention be transparent, documented, and consistent with the broader macroeconomic policy framework. Moreover, the use of reserve assets for stabilisation must respect legal encumbrances and the fiscal responsibilities outlined in the Public Financial Management Act.

Practical Advice

For stakeholders who wish to understand or leverage the 2025 cedi‑stabilisation episode, the following recommendations are useful:

For Policymakers

1. Document every FX transaction to maintain transparency and build market confidence.
2. Regularly re‑assess the composition of foreign‑exchange reserves to account for encumbrances and valuation changes.
3. Coordinate with the Ministry of Finance to ensure that intervention does not conflict with debt‑service obligations.

For Investors

1. Monitor official reserve reports and central‑bank statements for early signals of potential intervention.
2. Consider the impact of exchange‑rate movements on import‑cost structures, especially for oil‑intensive industries.
3. Diversify currency exposure; while the cedi may appreciate, volatility can re‑emerge if external shocks occur.

For Academics and Analysts

1. Use the “FX Intervention = Inflows – Change in Reserves” framework to estimate the scale of central‑bank actions.
2. Explore the transmission mechanisms between exchange‑rate policy and inflation dynamics.
3. Investigate the legal constraints imposed by the Bank of Ghana Act on reserve utilisation.

FAQ

Conclusion

The 2025 episode illustrates how a large foreign‑exchange inflow can be transformed into a deliberate policy tool to protect a national currency. By selling roughly US$10 billion of foreign assets, the Bank of Ghana succeeded in stabilising the cedi, preventing a potentially disruptive appreciation that could have hurt export competitiveness.

At the same time, the case underscores the importance of transparent accounting, legal compliance, and balanced macro‑economic management. Future policymakers will need to weigh the benefits of stabilisation against the costs of reserve depletion and the need to maintain confidence in the cedi’s long‑term value.

Ultimately, Ghana’s experience offers a valuable lesson for emerging markets: when faced with an abrupt surge in foreign‑exchange supply, a calibrated intervention strategy—backed by sound data, clear objectives, and legal grounding—can help preserve monetary stability while safeguarding economic growth.