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Friday, May 08, 2009

Interest Rates starting to trend downwards?

Treasury Bills (TBs) interest rates have started to trend downwards in figures disseminated by the Reserve Bank of Fiji today.

28 day TB rates fell from 5.79% issued on 8 April 2009 to 5.70% on its issuance on 6 May 2009. 91 day TB rates, similarly fell from 7.35% to 7.30% on those dates.

Banking system liquidity (measured by bank demand deposits held at the Reserve Bank of Fiji) rose to F$119.6 million at end 7 May 2009, from F$105.2 million a week earlier.

Given that TB rates have started to decline and given the rise in banking system liquidity which one hopes will be sustained, one can assume that commercial bank deposit rates should start to fall,. That ultimately should contribute to a fall in commercial bank lending rates.

As lending rates fall, the other challenge is to find projects/avenues where the available funds can be directed to be utilised for purposes that can generate production, exports and employment.

Check my other post here for suggestions on what can be done further.

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