DAR ES SALAAM, TANZANIA - Tanzania's Dar es Salaam Stock Exchange (DSE) trading are expected to
pick up because yields for fixed income securities and money market instruments keep on falling, thanks to easing tight money stance in the economy.
The stock exchange turnover last week dipped by almost 78% as money investors eyeing risk free government securities that in recently days offered handsome yields of between 13% and 18%.
A fortnight ago 365 days Treasury bill auction saw the yield rate cut to 15.30% from 18.44 % of previous month. But despite, the cut in yield rate, huge amount of Tsh440.32b was tendered. The central bank accepted only Tsh100b.
BoT's Director of Economic Research and Policy Dr Joe Masawe said the central bank would continue to accept the announced amount despite seeing oversubscription.
"We haven't changed our monetary stance yet.
The bank will accept the announced amount for now," Dr Masawe said: "This tells us that there is access liquidity in the market but we cannot accept the entire offer as by doing so will push-up interest rates in the market and affect macroeconomics fundamental."
The central bank director said at the moment does not target exchange rate nor change from flexible to band exchange rate regime. The latter regime put the exchange rate in a band and the central bank intervene to make sure the rate does not go outside the set band-the highest and lowest rates.
"Our policy is not to target the exchange rate but to stabilise the shilling by maintaining money circulation," Dr Masawe said adding, "We have to balance between intervention and T-bills interest rates to avoid distorting the market."
"The secondary market demand for assets remains high with 5 year paper seeing strong purchase at 13 %," the bank said in its daily market statement.
Stocks also face another challenges from commercial banks as of recently they increase the deposits ratios.