Dr. Kwabena Duffuor, Minister of Finance and Economic Planning
By William
Yaw Owusu
Accra, Friday August 17, 2012.
The Bank of Ghana
(BoG) says the yield on its 91-day Bill has risen from 22.80 percent to 22.91
percent since August 9 when the last public sale was effected.
According
to BoG, it sold 256.33 million Cedis ($132 million) of the 91-day paper out of
a total 324.07 million cedis of bids tendered.
Some
financial analysts argued that the rise might be attributed to cost of funds
inching higher while others said it is possible the cost of borrowing has gone
up.
Increasing
interest rate means it is more attractive for people to save in the current
climate of a depreciating cedi.
The
cedi has been under strain since the beginning of the year as mining and other
corporations in the country - a large gold producer and recent oil exporter - incresaed
demand for dollar denominated imported goods.
Other experts have blamed the currency weakness on
trade with China, as many traders are accumulating actual paper cash in dollars
due to the lack of effective transfer channels for the Yuan in Ghana.
Renaissance Capital has even predicted depreciation
of between 5 to 10 percent by the end of 2012.
The
increase in Treasury Bill rate also means that the Central Bank would be able to
mop up excess liquidity from the market.
However,
businesses cannot borrow, as its too expensive to borrow leading due to the
decline in economic activities.
Generally, some analysts believe
that the current situation would negatively affect the country’s economy.
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