T-Bills are one year instrument that are used to control excess money circulation in the market and keep inflation low. The market, according to Standard Chartered Bank, remained well funded at the closing of the week with tax outflows causing no pressure on the interbank funding, with analysts predicting declining in rates.
“We expect a further decline in interbank rates in June on the back of expected large maturities from T-bills,” the banks said in its Daily Market report issued on Friday. At the close of the week last Friday, the rate climbed slightly to 13.02 per cent from 11.94 per cent traded a day before, according to the StanChart market report.
However, the highest offer seen was at 15 per cent while the lowest remained at five per cent. Last Thursday, the highest interbank offer rate declined to 17 per cent from 18 per cent while the lowest offer remained at five per cent.
StanChart, however, was upbeat the rate would climb down further as the cash market remains liquid as “we move towards end of the month where large outflows for tax settlement are expected.” National Microfinance Bank’s (NMB) e-market report indicates that in the local Money Market, liquidity remained tight, with large corporate demanding shillings to make local payments.
“The local currency continued to trade at the 15 per cent level,” NMB said. Meanwhile, for a fifth consecutive day the shilling remained flat and stable on trading. The interbank and corporate fronts continue to see well balanced matching of flows. “We expect the shilling to remain below the 1,600/- mark,” Standard Chartered said.