Investors snub one-year T-bills

Tight monetary stance is to blame for the 19.5 per cent under subscription of the one-year treasury bills auctioned by the central bank last week.
The auction results, as posted by the Bank of Tanzania (BoT), show that 135bn/- T-bills on offer were under-subscribed with bids worth 108.6bn/- submitted. Successful bids however were 89.6bn/-.
“The under-subscription is due to the current tight liquidity condition in the market as we approach the quarter end,” stated the Barclays bank market report.
There were no major movements in interest rates as the 91-day paper dropped by a modest 9 bps while the 182-day paper edged higher by just a single basis point, stated the Barclays bank market report.
On the longer end, the 364-day paper hiked by 26 basis points as this was where most of the market’s interest lied.
The BoT applies monetary policy to control the volume of money in circulation. Currently, the BoT uses reserve money to contain inflation and also targets money supply and private sector credit growth rates.

But, persistence liquidity squeezing impacts negatively on the capacity of commercial banks to lend, affecting the growth of credit to the private sector, which is an engine of the economic growth. The International Monetary Fund (IMF) has advised
Source: The Daily News, reported from Dar es Salaam
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