AfricaPress-Tanzania: The Interbank Money Market (IMM) experienced the slowest week in the last ten years as weekly turnover dropped by 92 percent week on week attributed to Covid-19 pandemic.
The money market analysts said the weekly turnover totalled 4.5bn/- for a week ended last Friday and blaming spread of coronavirus for low turnover as lending activities in the economy slowed.
Data shows that it was in July 2010, the last time for which the low turnover was marked while the interbank rate was 0.15 percent.
Orbit Securities, said the year low might be caused by decline in lending activities that leave banks with excess liquidity hence no reason to borrow on the IMM.
“The possible reason for low activities on the IMM is declining lending activities by commercial banks due to declining business activities in the economy due to fears of coronavirus pandemic,” Orbit said in its weekly market synopsis on Tuesday.
The weighted average interbank rate (WAR) at the end of the week was 4.8 per cent, just 5.0 basis points (bps) lower than the previous week.
Tanzania Securities’ weekly market blast report projected that the average rate to be between 4.60 per cent and 5.0 per cent despite falling in previous week.
“…We still anticipate that WAR to be within a range of 4.60 per cent to 5.00 per cent with slight volatility in the high and low rate,” Tanzania securities projected.
NMB Bank, one of the largest lenders in the country, projected that at the end of this fiscal year, activities in the overnight market are expected to improve further.
“… [The] rates [are expected to] slightly go up as players look to cover their end of fiscal year shilling obligations,” NMB said in its market digest for quarter one.
The digest said this year’s first quarter marked a continuation of a liquid market with activities increasing by 43 per cent as interbank players positioned themselves to kick off the year.
Trading in the overnight market was up to 1.26tri/- in Q1 from 887bn/- recorded in the last quarter of 2019.
Consistent with liquidity progress, the overall IMM rates remained below 5.0per cent to average at 4.11per cent in quarter one slightly above 4.06per cent recorded in the previous quarter.
