HARARE - The money market has been haunted by liquidity challenges, affecting companies in the country who cannot access working capital.Analysts have said the money market, which under normal economic conditions plays a critical role in facilitating financing of companies’ working capital as well as supplying short term funding to the rest of economic players, remains starved of funding due to the systematic risk that remains embedded on all local financial markets.
“Liquidity on the market remains at critical levels as indicated by the thin deposit base on the local financial sector estimated at below US$1 billion,” said analysts in a recent report. They said activity on the money market remained subdued as the huge appetite for funding was not meeting a corresponding supply of liquidity.
Lending rates, as indicated by quotations on Bankers Acceptances for 30 to 90 day areas continue to trade on the 8 per cent to 15 per cent range whilst deposit rates are being quoted in the region of 6 per cent to 12 per cent.
“The local money market conditions, characterised by liquidity constraints and high interest rates, contrast those prevailing in other regional and international markets,” analysts said.
Post published in: Manufacturing