The cedi was unyielding against the dollar last week and it adds to recent gains spearheaded by the government’s announcement that its bonds had been oversubscribed.

The Bank of Ghana (BoG) held several auctions for three-year and five-year government bonds between February and August.

The bonds were all oversubscribed which brought in fresh greenback supplies from foreign investors.

On Friday, the cedi rose 0.73 percent to 1.9075/1.9100 to the greenback at 12:30 pm, Barclays Bank trader Jacob Brobbey is quoted by Reuters as saying after it opened the day at 1.9215/40.

“The market may enter a technical rally mood with the next key level being 1.9000,” Mr. Brobbey said.

The currency of the gold and oil exporter, which had slumped more than 20 percent versus the dollar earlier this year, began its recovery in July following liquidity tightening by the Central Bank.

The cedi ended August at 1.9325, up 1.35 percent from the month’s open of 1.9585 – the first monthly gain this year. Year to date, the local unit is down 16.8 percent.

On Tuesday, President John Mahama attributed the free fall of the cedi partly to global currency volatility.

He explained that the situation led to the near collapse of the Eurozone and also affected the fiscal stability of most emerging economies including India, saying “in the first half of this year we have had concerns about the depreciation of the cedi. This has resulted from a combination of factors.”

The daily depreciation of the Ghana cedi against major currencies has become a major headache for economic managers of the country.

Statistics show that the cedi has lost over a third of its value since Ghana began producing oil in November 2010, trading currently at around 1.98 and 2.1 per dollar.

While some analysts attributed the decline to the surging demand for the dollar and other currencies by both local and foreign investors and businesses mainly to cover import bills, others 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 another 5% to 10% depreciation before end of 2012.

President Mahama, delivering his ‘Critical Policy Actions – September to December 2012’ in Accra, said the bill for non-oil import doubled and also put more pressure on the country’s foreign exchange reserves.

“Last year, we spent twice as much foreign exchange on non-oil imports as the year before. This put pressure on our reserves of foreign exchange as our import bill continued rising. This must give us pause for thought.”

He said in spite of the weakened cedi “we have made tremendous strides in bringing down the rate of inflation to single digits.

“We have increased productivity and more value-added in agriculture and improvements in road infrastructure, especially in rural areas have meant more stable prices of food with positive consequences for inflation.

“However, we remain a substantially importing country, a situation which has consequences for our foreign exchange resources.

The President said his economic team had managed to “arrested the decline in the value of the cedi and it is gradually stabilizing against major foreign currencies.”

He promised that the government would not overspend as Ghana heads into general elections in December.