Overnight rate jumps six-week high

BoT HQ in Dar
The cash market on Tuesday recorded a sudden increase in overnight rates after a large decline reported a day earlier. 

The overnight, according to Standard Chartered Bank was pushed by small banks which are “constantly seen on the market funding”.

The market recorded the six-week highest traded rate that remained at 20 per cent while there was an increase in volume to 23.5bn/- compared to last week reported volumes below 15bn/-. 

“The market is experiencing some liquidity tightness driven by funding from small banks constantly seen on the market funding,” the Bank said on Wednesday daily market report. 

The bank also said “today (Wednesday) the BoT is selling 100bn/- T-bills, the spiking interbank rates will have a large impact on the auction outcome with interbank players expected to be more risk averse and demand high returns on the issue.”

On other hand the situation on the interbank market helped to strengthen the shilling to trade flat against the US dollar as demand continued to be well matched with supply.

“Today (Wednesday) we expect a similar trend with low level of volatility,” Standard Chartered said.
Source: tzexchange.blogspot.com

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