The overnight rate at which banks lend to each other on
emergency basis has fallen two percentage points to 3.6 per cent in the
past two weeks as more liquidity filters into the money market.
The
fall has coincided with increased activity by big lenders in the
interbank market, indicating they are now holding a larger volume of
cash than they need to deploy at a time the government is only picking
money in the securities auctions to roll over maturing debt.
“The
volumes traded increased to an average of Sh21.8 billion from Sh16.2
billion in the previous week, partly reflecting higher participation of
large banks in the interbank market...However, the weighted average
interbank rate has decreased as large banks concluded transactions at
lower rates,” said CBK in the weekly bulletin.
Lenders ideally direct the excess cash to government securities.
However,
the Treasury has exceeded its initial domestic borrowing target of
Sh268.7 billion for the fiscal year, meaning that Central Bank of Kenya
is under no pressure to accept bids at the weekly auctions.
Large banks have at times shown aversion to lending smaller peers.
No comments :
Post a Comment