Ghana’s economy is moving from crisis management toward consolidation. Following the 2022–2023 shock, sovereign debt stress, sharp cedi depreciation, and double-digit inflation, policy actions and unusual structural moves post-2024 have led to a discernible period of exchange-rate stability and even a degree of appreciation. That stabilisation matters for banks and for credit risk, but the gains are neither automatic nor evenly distributed.
The cedi’s wild depreciation of 2022 moderates into relative stability and episodes of appreciation in 2024–2025. The Bank of Ghana’s (BoG) monthly inter-bank series shows the end-period USD/GHS rate moving from roughly GHS 11–12 in 2023 to a range of around GHS 14–16 through 2024, and strengthening in 2025, with notable month-to-month appreciation from early 2025 levels. This emerging stability is owed to policy actions and a series of interventions that have materially rebuilt foreign reserves, giving BoG room to manage the exchange rate.
A distinct structural driver has been the government’s decision to centralise a large share of gold export receipts (the GoldBod initiative), which, according to BoG commentary, has routed more FX into the official system and materially raised reserves in 2025. That shift has reinforced the cedi and reduced short-term vulnerabilities to external shocks. But the implications of a stable or strengthening cedi are nuanced.
Banking opportunities from FX stability and credit-risk implications
It presents lower immediate FX risk for loan portfolios, particularly for banks with high proportions of clients exposed to FX-indexed costs, such as imported inputs and FX-denominated supplier contracts. The other opportunity is the fact that it reduces liquidity premia.The BoG has signalled that exchange-rate stability, together with tight macro policy, is facilitating easing inflation expectations, a necessary condition for eventual lower policy rates and funding costs, which we are beginning to see.
Additionally, exchange-rate stability creates greater confidence for longer-term lending and makes currency risk hedging cheaper and more available. As volatility falls, private hedging markets typically deepen and costs decline, giving banks and corporates tools to manage residual FX exposures more cheaply.
While the upside of exchange-rate stability is real, stability is not risk elimination. There are credit-risk implications. For example, NPL dynamics may lag exchange-rate improvements. NPLs respond with a delay. BoG data show that while asset quality improved in some months in 2024–2025, the stock of impaired loans remains a legacy drag on bank capital and risk appetite. Indeed, even if currency-driven defaults slow, credit risk can arise from real-sector weaknesses that a stable exchange-rate alone cannot fix.
Strategic implications for banks
This development requires a four-pronged action agenda. First, banks must re-price credit using forward-looking FX scenarios, not rear-view averages. They need to stress-test for tail FX shocks and recast their credit models to include the new lower-volatility regime.
Second, while keeping hedging corridors, banks need to reevaluate their product mix by increasing local-currency lending to tradable sectors. Banks can expand local currency financing for import-dependent capital expenditures in conjunction with optional hedging products when exchange rates are more predictable.
Thirdly, banks need to take action to clean up legacy balance-sheet currency mismatches. Banks should use a focused remediation approach to encourage corporates to hedge, restructure legacy FX loans where viable, and transparently reclassify FX exposure on bank books. The quicker banks reduce unhedged FX credit, the faster provisioning needs fall and lending capacity grows.
Fourth, it would be helpful if banks could adopt proactive client remediation programmes for firms that remain vulnerable to FX shocks. Banks that deploy finance-plus-advisory, such as cash-flow restructuring, input-sourcing alternatives, and hedging advice, will both lower portfolio risk and capture market share as lending conditions normalise.
In conclusion, exchange-rate stability in Ghana is a necessary but not sufficient condition for a broad-based credit recovery. It lowers one important dimension of borrower vulnerability and creates clear opportunities to reduce funding costs, expand local-currency lending to the tradable sectors, and rehabilitate impaired balance sheets. But the translation of stability into credit availability and lower lending rates requires deliberate bank actions, namely active currency-risk mitigation, focused remediation of legacy FX exposures, recalibrated provisioning, and client-facing advisory to rebuild borrower capacity.
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The author, Oscar Onai, is an economist, PMR, National Investment Bank, Ghana
Email: [email protected]
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