Ghana's cedi currency has jumped more than 40% versus the US dollar this year, far outperforming its African and emerging market peers, shrinking the cost of the country's foreign debt and giving it more fiscal breathing room.

The rally, which has surprised some investors, is another much-needed boost for the West African nation as it claws its way back from debt default and a punishing economic crisis.

In all the cedi has gained 42% against the dollar since January, changing hands near 10.20 to the greenback on Wednesday morning according to LSEG data.

"We have reduced our total debt over the last five months by almost 150-billion cedis which is very significant," Ghanaian President John Mahama told a session during the African Development Bank annual meeting in Abidjan this week, citing the cedi strength. 

"If that trajectory continues, the target of reaching 55-58% debt sustainability by 2028 will be reached by the end of this year. And that means that it begins to give us fiscal space to begin to invest in the most productive sectors of the economy," he said.  

While the US dollar has also been under pressure this year, the cedi's performance stands in stark contrast to other African currencies. 

Investment bank JPMorgan, in a note to clients, said the gold windfall - with prices having chalked up 28 record highs by April - was a tailwind for the cedi.

Tellimer's Hasnain Malik, in a note, said the country's on-track International Monetary Fund programme, as well as restrictive monetary policy, have also helped the "extraordinary spike".

Lutz Röhmeyer, head of portfolio management at Capitulum Asset Management, said local Ghanaian holders of US dollar debt exchanging their money back into cedis was also helping the gains.

On Monday, Ghana's central bank governor Johnson Asiama, speaking at the Ghana CEO Summit in Accra, said the central bank had not used its own reserves to support the cedi. He cited tight monetary policy, cleaner FX auctions and stronger remittance flows.

But Malik and Röhmeyer each warned that the rally may not last.

"There are reasons for caution after this spike," Malik wrote in the Tellimer note, citing drops in oil and cocoa prices, IMF forecasts that implied a coming depreciation.