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| Prof. Ndulu |
The 10 years treasury bond was received relatively well by the
investors on Wednesday after it was oversubscribed by 145 per cent, signifying
the market returns to normal after a four month of tight money stance.
The market return to equilibrium is key as interest rates were heading
north thus reducing the bank appetite to lend private sector.
The Bank of Tanzania (BoT) wanted to raise
20bn/- from a 10 year-bond that had a price
tag of 11.44 per cent as coupon rate, instead the market bided 49bn/-.
BoT accepted only 20bn/-.
BoT Governor Prof Benno Ndulu said dropping government securities
interest rates is a good sign that money market are heading back to normal.
“The trend will enable banks to lend out,” Prof Ndulu said during the inauguration
of the World Bank’s Tanzania Economic Updates report on Wednesday.
The money market interest rates climbed to almost over a decade high
when t-bills reached 19 per cent and interbank lending jumped to 36 per cent,
the historical high.
The northward trend was experience in the last four months
when the central bank introduced the tight liquidity measures to curb high
inflation and shilling down spiral trend, last October.
“The restrictive monetary policy has already pushed interest rates up
and reduced credit to the private sector,” The World Bank said in the report.
Standard Chartered Bank said on its Daily market commentary yesterday “the bond
auction was well received as market tendered 49.09bn/- against 20bn/- issues
and were accepted”.
The bank also said interbank continues to trade within wide range with
overnight rates increasing moderately to 7.73 per cent from the previous close
of 5.39 per cent.
The World Bank report shows that the authorities have
succeeded in keeping core inflation –excluding food and energy—below 10 per
cent.
“This move (was) intended to reduce monetary expansion and control
inflationary pressure,” the report indicates.
Source: The Daily News,www.dailynews.co.tz, reported by Abduel Elinaza
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