Tanzania Daily News (Dar es Salaam)

4 July 2012

Tanzania: Central Bank Out to Raise 100bn/ - Through T-Bills

The Bank of Tanzania (BoT) seeks to raise 100bn/- today through Treasury bills (T-bill), an increase by 43 per cent in offer size from 70bn/- in March, this year.

BoT increased the amount signifying the smooth transition to new fiscal year that began on Monday. Since mid-March the central bank reduced the offer size of her T-bills from 100bn/- to 70bn/- and stuck to the amount ever since.

"We expect the issue to be well tendered after the smooth cross over on the fiscal," standard chartered bank said, adding, "We expect the market to remain well funded with rates expected to decline as interbank demand subdue."

The split on the new T-bill issue is as follows: 35 days 5.0bn/-, 91 days 30bn/-, 182 days 30bn/- and 364 days 35bn/-. However, today's auction is a litmus paper for government securities interest rates that have exhibited unusual trend, downward slopping curve, where short-term instruments fetched high interest rate while the long term had low interest rates.

According to the Dhow Financial Ltd Chief Executive Officer Prof Mohamed Warsame said the downward sloping curve trend is only experienced during liquidity scarce in the market. "This is not a normal trend; normally the slope curve should be on upward trend, but it happens during liquid short supply, to push up demand for short term funds," Prof Warsame said recently.

The interest rates for T-bill are around 15 per cent while the longer term government papers (T-bonds), for 10 years fetches slightly above 10 per cent. Meanwhile, the shilling traded relatively flat against the US dollar yesterday on the back of a quiet first business day of the new fiscal year.

"Today we expect a similar trend with low level of volatility. Bias is on a slightly weaker shilling," StanChart said on its daily market report. Barclays bank said in the foreign exchange market the dollar was relatively stable during the trading session, opening at 1568/1582 levels. "Trade was fairly muted throughout the day (on Monday), with the pair closing at the same level," the Barclays said on its e-newsletter on Tuesday.

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