Expenditure hits money market

to between 50% and 150% from over 350% earlier, as the appetite for cash in the market eased.
Call money continued unchanged at 4% or below while the interbank overnight rate dropped to 80% from between 180% and 300% previously.
Analysts said the market had very low volumes of Treasury Bills (TBs) maturities up to December and was expected to remain short in the short-term, although government expenditure will occasionally reduce the deficit.
Analysts say with the tobacco-selling season closing next month there will be
no significant liquidity injection into the market in the short-term.
The Reserve Bank of Zimbabwe’s Monthly Economic Review for June shows that the
rate at which banks have been subscribing into TB’s versus their loan origination has been coming down since beginning of 2006.
The trend is progressive downwards, showing that inasmuch as banks are buying TBs everyday, their loan origination is much faster. Due to the poor returns on TBs banks have switched to overdraft facilities whose rates are determined by the minimum lending rates.
Minimum lending rates of banks are averaging 450% per annum. Compounded monthly as they do, they give an annualised return of 4 530%, well ahead of the
340% on the TBs on offer at the Reserve Bank.
The central bank’s accommodation rates have remained unchanged at 600% and
700%. – Own Correspondent