business and investments blog

INTEREST RATE EXPERIENCES DOWNWARD TREND IN JANUARY

By The Guardian Reporter 

Commercial banks deposit rates exhibited a general downward trend while lending rates increased in January 2014.

According to the Bank of Tanzania (BoT) Monthly Economic Review of February 2014 the overall time deposits rates decreased to 8.7 percent from 8.8 percent registered in December 2013, while overall lending rates increased to 16.2 percent from 16.0 percent registered in December 2013.

However, short-term lending rates (up to one year) was 14.3 percent in January 2014 up from 13.8 percent in previous month, while 12-months deposit rates remained broadly unchanged at 11.1 percent.

Consequently, the spread between 12-month time deposit rate and one-year lending rate widened to 3.1 percentage points from 2.6 percentage points recorded in December 2013.

On the other hand, the review said the Financial Markets Developments of Treasury Bills and Treasury Bonds Markets in January 2014, was much higher in the demand for Treasury bills compared to the preceding month.

The total demand stood at 427.5bn/- against the supply of 225bn/-, it said, adding that in the preceding month, 480bn/- was supplied, while the demand stood at 290.1bn/-.

In line with the high demand, the overall Treasury bills yields declined to 14.70 percent from 15.20 percent registered in December 2013.

In the Treasury bonds market, the bank supplied 55.9bn/-, same as the preceding month, while demand stood at 98.1bn/-, implying an oversubscription of 42.2bn/.
Owing to the existence of some outlier bids, the bank accepted bids worth 47.6bn/-, consistent to the amount offered in the market.

During the period, the weighted average yield for the 2-year bond increased to 15.1 percent from 15.0 percent recorded in the preceding auction, while that of 5-year decreased to 14.5 percent from 15.4 percent. 

SOURCE: THE GUARDIAN 7^th April 2014