Ghana Scrambles To Get A Grip On Cedi Ahead Of Elections

The Ghanian government, which faces a tough fight in Saturdays general election, has taken aggressive steps in recent months to halt the decline of the Ghanian cedi amid a challenging macroeconomic environment.

The cedi has been under pressure for several years. Like practically every African and emerging market currency, the cedi weakened dramatically against the US dollar during the Covid-19 pandemic, during which time traders on foreign exchange markets sought the perceived safety of dollar-denominated assets.

The cedi took a further tumble in 2022, when Ghana defaulted on most of its external debt amid rising debt costs, higher interest rates, and excessive government borrowing. Since the start of 2020, the US dollar has gained almost 180 against the Ghanian cedi, which currently sits at 15 to the dollar, an increase from 11 in May 2023.

On Saturday, ruling party candidate Mahamudu Bawumia, who is replacing incumbent Nana Akufo-Addo, runs against former President John Mahama in a contest which could be influenced by the economy and citizens experiences of inflation.

It is in this context that the Ghanian government has taken drastic steps to try and halt further declines in the currency, with the authorities recently trying to prevent pension fund managers from investing in offshore assets in an attempt to limit foreign exchange outflows.