BoT: Interbank money rate remains flat in two months

Dar es Salaam. Interbank money market rate has almost remained flat for nearly two months ending April 17 this year.

That indicates stable liquidity in the banking industry.

The Bank of Tanzania’s Interbank Money Market report shows that the average rate remained at between five and six per cent throughout the period. However, the reviewed rates were higher than the average of 1.31 per cent recorded during the last week of April last year, and twice the rate recorded during the fourth quarter of last year.

The report shows that the overnight rate started to hit the 5 per cent mark on March 6 this year, ranging between 5.10 per cent and 5.70 per cent in two months.

The report shows that there was a slowdown of transactions in March, compared with February this year.

In March, according to the BoT report, Sh703.2 billion was transacted overnight compared with Sh888 billion transacted in February this year. Overnight placements in February accounted for 68.1 per cent of the total interbank cash market (IBCM) transactions, higher than 50.6 per cent recorded during the preceding month, according to Bank of Tanzania (BoT) Monetary Policy Statement for February 2019.

This being experienced while BoT is implementing an accommodative monetary policy maintaining adequate level of liquidity among banks to further stimulate growth of credit to the private sector and the entire economy.Reflecting liquidity condition among banks and seasonal demand for banks reserves, total transactions in IBCM was Sh736.1 billion in January this year.

BoT says in its new monetary policy that has remained in the market for liquidity management purpose and maintaining an orderly money market condition.