Pressure continues to mount on the Ghana Cedi as the local currency hit a snag for the third week running against the US dollar.

Analysts attributed the depreciation of the cedi to a complete lack of dollar supply on the market which might continue in the coming weeks though the Central Bank has strong reserves to deal with the pressure.

With heightened onshore demand from local importers and manufacturers, the Cedi might lose its weight against the local currency again this week.

At the end of trading yesterday, the cedi traded at GH¢1.5133 buying and selling at GH¢1.5433 to the dollar on the inter-bank market.

Lourens Harmse, a Johannesburg-based currency trader at Absa Bank Limited told Bloomberg that the cedi may weaken to “around 1.5750 per dollar” if the bank doesn’t sell any foreign currency.

“The cedi will come under pressure in the coming weeks if the Central Bank continues to refrain from selling dollar,” Jacob Brobbey, a currency trader at the local unit of Barclays Bank Plc also mentioned.

Some analysts are predicting 6.0 percent depreciation by the end of the year though it declined by 2.2 percent against the US dollar in nominal terms at the end of the first six months of the year.

The Cedi’s value against the dollar touched its worst level since redenomination after declining by 0.34 percent depreciation last week and adding up to the 64 percent decline in the local currency’s cumulative value since July 2007.

The cedi depreciated by 2.2 percent against the dollar in nominal terms for the first six months of 2011 compared to a marginal depreciation of 0.6 percent for the same period in 2010.

In trade weighted terms, a nominal effective depreciation of three percent by the Cedi was recorded by the end of July 2011.

Some players and analysts in the financial sector have already predicted that the cedi will end the year at GH¢1.55 against the dollar.

Alhassan Andani, Managing Director, Stanbic Bank Ghana, commenting on the outlook of the Ghana Cedi earlier, said oil exports which is expected to bring in about GH¢584 million and a strong economy will keep the cedi strong against the major currencies.

Sampson Akligoh of Databank also indicated that the local currency could end the year 2011 within the range of GH¢1.54 and GH¢1.55 due to strong reserves position of the country which stood at $4.7 billion as at the end of August 2011.

This translates into an average of 3.7 months of import cover for goods and services and the relatively strong capital account inflows.

Ghana’s currency is pegged to the American Dollar and therefore the nation undertakes foreign trading activities with the ‘green’ currency.

Traders, including rice importers and spare parts dealers, often use the dollar to transact business and therefore any decline in the cedi tends to increase cost which is passed onto consumers.

A stable exchange rate also allows foreign investors to put their capital in Ghanaian equities, since they will record gains.