The cash interbank money markets experienced continued tight liquidity
with overnight rates going up to as high as 13 per cent in the last two weeks.
The rate climbed from eight per cent at the beginning of the second
week of this month to 13 per cent as of yesterday, bank of Tanzania’s inter
money market data shows. The volume also picked up to 30.5bn/- the highest in
two weeks.
However, 13 per cent rate is still low compared to 38 per cent the
market recorded at the opening of this year, which was the highest since the
introduction of financial sector reforms in the 1990s.
The surging interbank trading helped the shilling hold steadily against
the US dollar on slowed commercial banks’ demand for the greenback last
Thursday as investors settled T-bills obligations, National Microfinance Bank
said in its market out look.
The shilling traded between 1,593/-and 1,599/- per US dollar throughout
the session last week. “Provided the Bank of Tanzania remains in the market
selling dollars, a similar trend is expected to continue on Tuesday,” Standard
Chartered banks indicated on Monday.
The central bank said the shilling traded relatively flat against the
US dollar on Friday on the back of matched flows in corporate and interbank
markets. Since the opening of this year, the market stability assisted the
shilling sparkling after trading almost flat against the US dollar, amid quiet
markets as demand was well matched by supply.
Due to market stability overnight rates decreased to 1 and 10 per cent
levels since the first day of this month, while the Repo rates have shown
significant drop at between three and five per cent for one week and two weeks,
respectively.
Source:tzexchange.blogspot.com
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