The Bank of Ghana (BoG) says the yield on its 91-day Bill has risen to 23.09 percent from 23.08 percent at the last auction.

According to Reuters, the Central Bank said 172.39 million cedis ($91 million) worth of bids for the 91-day paper were accepted at the auction out of a total 176.29 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 – increased 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.

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 1.9115 per dollar.

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 it’s too expensive to borrow due to the decline in economic activities.

Generally, some analysts believe that the current situation would negatively affect the country’s economy.