Borrowers from the banks who had been hard pressed with high interests now have something to smile about. This follows the drop in the Treasury bill rates in the last two weeks. In the last two weeks, the yields have come down by more than four percentage points to 16.49 percent and 17.13 percent respectively. This was as at the Central Bank of Kenya’s latest auction of the 182 and 364 day Treasury bills.
During the auction of the 182 day paper, the yield came down by 4.536 percentage points and that of the 364 day paper tumbled by 4.082 percentage points. The 91-day Treasury bill was sold at 19.5 percent last week and this could go down in the results to be announced today Friday.
The lending rates in the country have risen high in the past few months. This follows the rise in the rates of the government securities. This is called high-yield risk free lending rates. They usually raise the lending rates as banks prefer using such rates to lend to their customers. Reports from the International Monetary Fund (IMF) however, indicated that the high interest rates were just temporary and that they were moving towards stability.
When the high lending rates were at its peak, the 91-day Treasury bill operated at 22.5 percent as those of 182 and 364 day paper were at 22.3 percent and 22.4 percent respectively. The lending rates of commercial banks rose as high as 27 percent.
The high interest rates also came as a result of the continuous ailing shilling against the dollar in the past months. The shilling has been on the receiving end against the dollar for some time now. Economists however, project that the shilling will soon stabilize and this will greatly help in bring the interest rates further down to where they were initially.