The strong demand for money to fund the
general elections concluded last month is one of the reasons that led to
the increased lending despite rise of interest rate. Also, during
September the overall deposit rate declined to 9.03 percent from 9.05
percent in the previous month.
The 12-month deposit rate rose slightly
to 10.87 percent from 10.50 percent in the preceding month, whereas
interest rate on one-year loans declined to 14.27 per cent from 14.36
per cent. The interest rate spread between one-year loans and deposits
narrowed to 3.40 percentage points from 3.86 percentage points in August
2015.
During the period under review, the Bank
of Tanzania (BoT) conducted two Treasury bills auctions by offering
285bn/-. Bids received amounted to 372.3bn/-, implying an
over-subscription of 87.3bn/-. Successful bids amounted to 355bn/-.
The overall weighted average yield rose
slightly to 13.93 percent from 13.83 percent in August 2015. Also, the
three actions for five, seven and ten year Treasury bonds were
conducted.
The amount offered for 5-year bond was
47bn/-, while that of 7 and 10 year bonds were 98.4bn/- and 40bn/-
respectively. All the auctions were undersubscribed as bids were
received were 45bn/-, 50.6bn/- and 32.2bn/-respectively.
The Inter-bank cash market transactions
amounted to 844.9bn/- in September 2015, significantly higher than
493.2bn/-transacted in August 2015.
Overnight transactions accounted for
73.4 percent of inter-bank cash market transactions compared with 79.3
percent in the preceding month. In line with adequate liquidity in the
banking system, the overall inter-bank cash market rate decreased to
6.62 percent from 9.78 percent in August 2015.
The overnight inter-bank cash market rate decreased 6.27 percent from 9.75 percent.
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