THE Interbank Money Market (IMM) transactions have slowed down for the third week in a row, signifying that banks accumulated enough funds.
The IMM trading for week ending last Friday, slowed down by 25 per cent to a total of 52.65bn/- compared to 70.6bn/- traded during the previous week.
Orbit Securities Market Analyst, Imani Muhingo said there are many factors behind interbank trading’s slowing down but in most cases banks will be stashed with enough funds.
“The current phenomenal tells that banks have substantial funds and there is no need to borrow from each other.
“This is the reason interbank rates were not left behind as they eased with the volumes,” Mr Muhingo told the ‘Daily News’ yesterday.
The interbank rate closed the week at 5.1 per cent, down 19bps from 5.29 per cent recorded at the end of the previous week.
He said, however, the coming Bank of Tanzania monthly economic report will ornate the true picture of interbank trend this month.
Mr Muhingo said the trend was a good sign for the economy since it showed that commercial banks have ample funds to carry out their obligations without lending each other.
“It is a good sign for the economy, as banks have funds— to ease demand for money at interbank,” Mr Muhingo said.
The market analyst said at one point last year, the interbank rate dropped to 2.0 per cent when banks hesitated to lend after non-performing loans ballooned.
BoT’s August Monthly Economic Review showed money supply growth continued to gradually increase in the wake of accommodative monetary policy and expansion of credit to the private sector.