To understand why Ghana’s cedi seems to be permanently gasping for air, one must look beyond the daily exchange rate figures and the ritual press statements from the Bank of Ghana. The problem is not sentiment or speculation alone. It is structural. Deeply structural.

Think of the cedi as a hardworking trader at Makola who earns in Ghana cedis but must pay rent, restock goods, and settle debts in dollars. No matter how disciplined that trader is, the mismatch between what she earns and what she must pay will always leave her struggling. That, in simple terms, is Ghana’s foreign exchange problem.

The currency mismatch trap

A large part of our economy earns in cedis but owes in dollars. Government revenues are largely collected in cedis; taxes, fees, levies yet many of the obligations of the state are denominated in foreign currency. External debt servicing, energy sector payments, some infrastructure contracts, and even essential imports are priced in dollars.

So every time the cedi weakens, the real cost of servicing those obligations balloons. A dollar debt does not shrink because the cedi is under pressure; it grows heavier. The result is predictable: panic demand for dollars, pressure on reserves, and emergency interventions by the central bank.

Import dependence: the silent pressure

Ghana imports far more than it produces for export. From fuel to pharmaceuticals, rice to spare parts, we rely on foreign goods to keep the economy running. Every import is a demand for dollars.

This means that even when the economy is “stable,” there is a constant outflow of foreign exchange. When global oil prices rise, when shipping costs increase, or when cocoa revenues fall short, the pressure intensifies. The cedi weakens not because of bad luck, but because demand for foreign currency persistently exceeds supply.

External debt servicing: dollars don’t negotiate

External debt servicing is one of the most unforgiving pressures on the cedi. Interest payments and principal repayments must be made on schedule, in foreign currency. There are no excuses and no extensions without consequences.

When these payments fall due, government must find dollars: whether the market is calm or volatile. This often forces the central bank to dip into reserves or step into the market to smooth volatility. Without such intervention, sharp depreciation would ripple through prices, inflation, and public confidence.

Trade financing: business runs on FX

Many Ghanaian businesses rely on trade finance to import raw materials and finished goods. Letters of credit, supplier payments, and shipping insurance are all dollar-based. When FX becomes scarce or unpredictable, banks tighten conditions, importers panic-buy dollars, and prices are adjusted upwards “just in case.”

This behaviour feeds on itself. Volatility becomes self-fulfilling. Businesses rush for dollars not because they want to speculate, but because they cannot afford to be locked out of supply chains.

Why the Bank of Ghana keeps stepping in

Central bank intervention is often criticised, but in Ghana’s case it is less a choice than a necessity. Left entirely to market forces, the cedi would experience sharp swings that would quickly translate into higher fuel prices, transport fares, food costs, and rent. Intervention is the oxygen mask; temporary relief, not a cure.

The real cure lies in addressing the fundamentals: producing more of what we consume, exporting higher-value goods, managing external debt prudently, and reducing our exposure to dollar-denominated obligations.

Until then, the cedi will continue to pant for breath, and the Bank of Ghana will keep rushing to its side. Not because it enjoys the role, but because the structure of our economy leaves it with little choice.

The conversation, therefore, should move away from blaming the cedi and focus instead on rebuilding the lungs of the economy itself.

GHANA MUST WORK AGAIN

Inspiration drawn from Mr Daniel Addo of Koforidua