High T-bill rates lift dollar inflows
Sep 18, 2003
THE current high interest rates on Treasury bills (T-bills) has attracted several cross-border investors into the local money market.
By Steven Odeu
THE current high interest rates on Treasury bills (T-bills) has attracted several cross-border investors into the local money market.
Bank of Uganda said yesterday, off-shore buyers bought sh12b of the total sh80b in T-bills during the last auction two weeks ago.
Michael Atingi-Ego, the director of research at the Central Bank said, “Interest rates in Uganda are higher than all the other countries in the region. We therefore offer investors a guarantee on dollar returns. This increase of offshore pressure has also led to an increase in the dollars being sold into the market to participate in the T-bill market,†Atingi-Ego told journalists during the monthly briefing.
However, according to the latest Economic and Financial Indicators released by the BOU, there is a gradual decline in the T-bills interest rates indicating a decline in borrowing rates in the near future.
The discount rates declined from 18.89%, 19.88% and 17.40% as at end of July 2003 to 14.16%, 15.97%, 16.45% and 15.07% in August for the 91-day, 182-day, 273-day and 365 day bills, respectively.
Due to a decline in the discount rate, the total amount of T-bills offered also declined from sh150b in July 2003 to sh135b in August while total bids increased from sh190b to sh255.8b.
Meanwhile the stock of Treasury bills outstanding as at end of August amounted to sh1.22 trillion. This was an increase of sh34.89b from the end of July 2003 stock of sh1.21trillion. The stock of T-bills held by BOU (including rediscounts) declined further from sh135.23b at the end of July 2003 to sh125.26b at end of August 2003.
THE current high interest rates on Treasury bills (T-bills) has attracted several cross-border investors into the local money market.
Bank of Uganda said yesterday, off-shore buyers bought sh12b of the total sh80b in T-bills during the last auction two weeks ago.
Michael Atingi-Ego, the director of research at the Central Bank said, “Interest rates in Uganda are higher than all the other countries in the region. We therefore offer investors a guarantee on dollar returns. This increase of offshore pressure has also led to an increase in the dollars being sold into the market to participate in the T-bill market,†Atingi-Ego told journalists during the monthly briefing.
However, according to the latest Economic and Financial Indicators released by the BOU, there is a gradual decline in the T-bills interest rates indicating a decline in borrowing rates in the near future.
The discount rates declined from 18.89%, 19.88% and 17.40% as at end of July 2003 to 14.16%, 15.97%, 16.45% and 15.07% in August for the 91-day, 182-day, 273-day and 365 day bills, respectively.
Due to a decline in the discount rate, the total amount of T-bills offered also declined from sh150b in July 2003 to sh135b in August while total bids increased from sh190b to sh255.8b.
Meanwhile the stock of Treasury bills outstanding as at end of August amounted to sh1.22 trillion. This was an increase of sh34.89b from the end of July 2003 stock of sh1.21trillion. The stock of T-bills held by BOU (including rediscounts) declined further from sh135.23b at the end of July 2003 to sh125.26b at end of August 2003.