Interest rates expected to stabilize as gov’t borrows GH¢6 billion

President John Mahama’s administration intends to borrow GH¢6.353 billion through Treasury bills, amid anticipations of a possible interest rate cut following weeks of consistent hikes.

The 91-day, 182-day, and 364-day bills will be issued in order to refinance GH¢5.60 billion in maturing obligations in order to accomplish the borrowing.

Since the beginning of the year, interest rates have increased, indicating worries in the money market. They currently average about 29%.

In spite of the government’s heavy reliance on short-term instruments to meet its funding needs, analysts expect rate stabilization in this auction.

As GH¢8.84 billion was raised against a target of GH¢6.35 billion and maturing bills worth GH¢5.53 billion, the government experienced its third consecutive oversubscription in the money market last week.

Although there were slight bid rejections for the 91-day and 182-day instruments, week-over-week yields for the 91-day, 182-day, and 364-day bills increased marginally to 28.42% (+8 basis points), 28.96% (+1 bps), and 30.29% (+11 bps), respectively.

Although a possible monetary policy hold is anticipated this week, the strong investor participation illustrates the allure of high yields.

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