Overnight rate slides further down

Bank’s overnight borrowing rate has gone down dramatically to 14.28 per cent, thanks for the fall of the repurchase agreement and easing of tight money stance.

The overnight, the window which banks borrow from each other, went down at the close of market last Friday from the 24.15 per cent of previous week. Fortnight ago the rate has climbed to over 30 per cent which was historical high. 

Tanzania Securities Business Analyst Joel Nkya attributed the declining trend to fall of Repo:

“The fall of interbank lending rate could be attributed to the fall
of repo rates which dropped from 13.5 per cent in the previous week to
8.5 per cent this week for 14 days repo agreement,” Mr Nkya said in the weekly market report.

The Standard Chartered Bank said the overnight rate continues to drop, now at 14.28 per cent “further affirming the easing liquidity conditions in the market”.

Shilling strengthening is among the factors that pushed down the overnight rates as for the second week has been trading at very little volatility against US dollar.

The shilling closed the market last Friday trading flat against the dollar on the back of a relatively quiet session of matched inflows and demand in the interbank market.

The shilling is trading between 1,580/- and 1,600/- margins a dollar.

Meanwhile, this Wednesday there is a 25bn/- five-year bond on auction. After poor performance, and even cancellation of recent 5-year bonds it will be interesting to see how investors approach the auction.

“It is believed that rejected bids/auctions were on the back of prices sought by investors being too low,” Standard Chartered Bank said in a today’s daily market report.
Source: Tanzania Exchange: tzexchange.blogspot.com

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