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RBZ not moved by low interest rates

THE central bank remained unperturbed by market concerns over low interest rates in a hyperinflationary environment and continued to suppress bids asking for higher rates on its daily treasury bill (TB) auctions.

The three-month

paper, which the Reserve Bank had abandoned on August 4, bounced back on Tuesday with an average rate of 66,33%, down on the old rate of 200% when the central bank last issued the three-month paper.

“As expected, there was an awful stampede for it as total bids of $12,1 billion were received yet the central bank only allotted $1 billion,” equities firm, Kingdom Stockbrokers, said in its weekly commentary to investors.

“Surprisingly, one bank went in at 200% and obviously got nothing. The highest tendered rate was 200% while the lowest was 50%,” Kingdom said.

The stockbroking company said indications were that Tuesday’s tender “was only meant to align rates to what has happened to six months and one-year papers”.

“For instance, the 181-day rate, which stood at 250% prior to its stoppage on August 31, resurfaced on Tuesday (12/09/06) and Wednesday (13/09/06) lower at 199% and 143,44%, respectively. Last week the paper was on offer since Tuesday (19/09/06) and the rate closed lower at 128,5% while on Wednesday (20/09/06) it slumped further to 105.91%,” the firm’s analyst said in the weekly report.

On Monday, the rate closed even lower at 100,93%.

The 365-day Treasury bill that had early this month stabilised at 300% fell to 192,38% when the central bank brought it back during the middle of the month.

Last week, the rate closed lower on Friday at 150%. — Staff Writer.

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