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| BoT Head Quarter |
The Bank of Tanzania (BoT) has relaxed its stance on Treasury Bills and
accepted more during last week’s auction, which was oversubscribed by almost 17
per cent.
The central bank wanted to mop-out 100bn/- in circulation but ended up
accepting 116.67bn/-. A change of
policy was due to the fact that the rates were low in favour of the bank.
The bidders, despite low yield return across the board compared to the
previous auction, offered 148.55bn/- in total.
The 364-day Treasury Bills weighted average yield, dropped to 12.38
from 12.45 per cent from the previous auction, while its average price stands
at 89/01.
The 182-day yield also slipped to 12.26 from 12.33 per cent with a
piece selling at 94/24. The 91 and 35
days bills were also not spared when their prices and yield rates crushed to
11.74 from 11.78 and 5.24 per cent with the prices pegged at 97/16 and 99/50
respectively.
According to Tanzania Securities Business Analyst Joel Nkya, the
central bank has decided to borrow more than its initial target because most
bidders offered prices which are favourable.
Commenting on the declining yield rates on the Treasury Bills, Mr Nkya
said there would be a drop due to easing of the central bank’s liquidity policy.
On the other hand, Standard Chartered Bank said last week that the
auction of the bill remains to be seen as a positive sentiment after the
central bank maintained its size at 100bn/-.
“We expect over subscription and the curve to decline between 100 to 150
basic points,” the bank predicted last week.
Nevertheless, the oversubscription will likely affect the interbank
money market due to increased activities as banks meet their obligations to
settle settlement for the Treasury Bills.
This is the second time this year, the central bank has accepted more
than the projected auction amount. Mid
last month, the bank also accepted 146.7bn/- out of 273.2bn/- tendered during
the auction which was to raise 100bn/-.
Source: The Daily News,www.dailynews.co.tz, reported by Abduel Elinaza
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