World Bank Warns Ghana Against Over-Managing Strong Cedi

U.S Dollars and Ghana Cedi

Ghana’s resurgent cedi faces a new challenge: well-intentioned management.

The World Bank has cautioned the Bank of Ghana (BoG) against “excessive” interventions in the foreign exchange market, echoing similar concerns raised by the IMF.

This warning comes even as the cedi enjoys its strongest performance in years.

The Bank’s 9th Ghana Economic Update acknowledges the currency’s impressive appreciation in early 2025. It credits a combination of factors: tighter monetary policy, fiscal belt-tightening, record-high reserve accumulation, and improved investor confidence. The report also confirms BoG’s own market actions played a supporting role.

“This appreciation was supported by a tighter monetary policy stance, ongoing fiscal consolidation, record reserve accumulation, improved market sentiment, and interventions by the Bank of Ghana,” the World Bank stated. The cedi has traded steadily between GH¢10 and GH¢11 to the US dollar recently, boosting economic confidence.

However, the Bank urged significant restraint. It warned that sustained, heavy-handed BoG interventions risk distorting the currency market and undermining the flexibility of Ghana’s exchange rate system. “FX interventions by the BoG should be managed carefully to avoid distortions… and allow for a more flexible exchange rate regime,” the report advised sharply.

The caution arrives alongside positive inflation news. Headline inflation dropped to 13.7% in June 2025, marking six straight months of decline. The World Bank attributed this to the high 28% policy rate, better macroeconomic conditions, and the cedi’s rebound.

With inflation easing and the currency firm, the World Bank stressed that maintaining these hard-won gains requires disciplined policy. Avoiding artificial pressures in the FX market is now crucial. Can Ghana sustain its momentum without oversteering?

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