The Interbank borrowing rates have
declined to around 3.00 per cent, signifying liquidity improvement while
sending signals of reduced cost of borrowing.
The rates, according to the Bank of
Tanzania (BoT), traded at between 3.17 per cent and 3.98 per cent in the
last two weeks while the lowest trading volume was 8.2m/- and the
highest 42.05m/- per session.
By comparison, the rates are the lowest
since the beginning of last month that stood at over 6.00 per cent and
better off than over 9.00 per cent of September this year.
Standard
Chartered Bank said interbank volume rose to 25.5bn/- from 8.2bn/-
amidst a fall in interest rates in both interbank and on a seven-day
Repos.
“Month end led to a spike in interbank
borrowing and BoT mopped 10 billion for seven day at 3.25 per cent, a
drop of 50bps (basic points),” the bank said on its daily market report.
Tanzania Securities said climbing down of the interbank rates “reflects
the improving money market environment”.
On the other hand, market analysts said
descending of interbank rates was good for the economy as it lowered the
lending cost, hence stability in the prices of goods and services.
They
argued that the continued falling of the interbank rates, the facility
that sees banks borrowing from each other, to less than two per cent is
healthier for the economy as it reduces production costs.
Interbank rates are normally influenced
by Treasury Bills maturity rates and end month corporate
obligations—taxes and salaries—which left the market well funded.
In
January, the interbank rates reached 35 per cent, which were the all
time levels in the history of the country. The best levels were in 2010
when the rates were less than one per cent in much of the year.
Source: The Daily News, www.dailynews.co.tz, reported by Abduel Elinaza in Dar es Salaam
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