Overnight interest rates ascend to 13%

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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