BoT: Money circulating outside banks decelerates by 4 pct

BY THE GUARDIAN REPORTER

15th March 2013

Bank of Tanzania(BOT)

The Bank of Tanzania (BoT) has said an annual growth of extended broad money supply (M3) decelerated to 12.1 percent in January 2013 from 16.1 percent recorded in January 2012. 
The sum of currency circulating outside banks and Tanzania’s residents’ deposits with depository corporations, are defined at various levels of aggregation as money supply narrowly and broadly defined.

According to the Bank’s monthly economic review for February this year, the development was largely explained by continued contraction of Net Foreign Assets (NFA) of banks and a slowdown in the growth of domestic credit.
The NFA of the banks contracted by 41.0 percent, compared to the contraction of 8.4 percent recorded in the corresponding period of 2012, partly associated with stability in the shilling against the US Dollar. 

In the same period the review said the net government borrowing from the banking system was  474.4bn/- , compared to 957.6bn/-  recorded in the year ending January 2012, reflecting improved government efforts in revenue collection. 

In the treasury bonds market, the review said the Bank conducted two separate auctions for 7-year and 10-year Treasury bonds each valued at 55.0bn/- . Both auctions were undersubscribed, with demand amounting to 38.4bn/- and 39.8bn/-, respectively.

The Bank intervened in both auctions by canceling the 10-year Treasury bond and accepted bids worth 12.9bn/- for the 7-year bond.

As a result, the weighted average yield for the 7-year Treasury bond increased to 15.59 percent from 15.25 percent which was recorded in the preceding auction.

On inter-bank cash market, the review said the volume of transactions in the inter-bank cash market amounted to 615.8bn/- compared to 510.8bn/- recorded in December 2012. 

Overnight transactions accounted for 75.9 percent of the total volume compared to 55.3 percent recorded in the preceding month. Overall interbank cash market rate increased to 8.13 percent from 5.80 percent in the preceding month.

The review also said in January 2013, overall lending rate rose to an average of 15.57 percent from 14.84 percent in January 2012, partly reflecting developments in the treasury bills market.

The overall time deposit rate averaged to 8.59 percent compared to 8.45 percent recorded in December 2012 and 7.56 percent in January 2012. The spread between 12-month deposit rate and one year lending rate narrowed to 3.90 percentage points in January 2013, from 4.06 percentage points recorded in December 2012 and 4.88 percentage points in January 2012.

During January 2013, the volume of transactions in the interbank foreign exchange market (IFEM) was USD 100.0 million compared to USD 94.1 million transacted in December 2012.

The Bank sold USD 75.9 million compared to USD 65.1 million recorded in the preceding month. The shilling depreciated slightly against the US Dollar trading at 1,584.49/- per USD from 1,578.41/- per USD in December 2012. 

On an annual basis, the shilling recorded a slight appreciation of 0.2 percent from 1,588.33/- per USD traded in January 2012. 

SOURCE: THE GUARDIAN