It has been projected that Treasury bill rates, which have been climbing steadily over the past month, may finally ease this week, but the relief could be short-lived.
According to financial analyst Mac Jordan Nartey, Senior Research Analyst at Laurus Africa, this forecast is premised on two factors.
Mac Jordan Nartey says the four-week streak of rising yields has been driven largely by tight liquidity and investor demand for higher compensation. But this week presents a different picture.
The analyst believes that the upcoming auction is likely to see a temporary drop in T-bill rates due to the expected policy rate cut from the Bank of Ghana’s Monetary Policy Committee (MPC).
He adds that the significant reduction in the government’s funding needs for this week is likely to drag down the rate due to weak demand by the government.
The government is targeting GH¢2.86 billion in this week’s auction, a sharp 55% decrease compared to previous weeks. According to Nartey, this lighter demand for funds means the government will have less pressure to raise rates in order to attract buyers, giving room for yields to edge downward.
However, he warns that investors should not be quick to assume the trend will last. Once the government’s funding requirements pick up again in the coming weeks, as they typically do towards month-end and quarter-end, yields are likely to climb back up.
“We’ve also seen continuously increasing yields over the past four weeks, and that narrative could continue going into other auctions in the future. However, for this week, we believe that the yields could decline this week. Our expectation is anchored by the fact that we’re expecting a policy rate cut from the MPC. And also, when you check the government demand for funds this week, we’ve seen it possibly decline by about 55%, where the government expects to raise 2.86 billion this week,” the analyst predicted.
For savers, pension funds, and institutional investors, this insight offers an important guide.
While this week may present an opportunity to lock in bills at slightly lower rates, the upward pressure on yields is far from over.
The analyst’s forecast adds a new layer to market expectations as Ghana navigates a period of tight liquidity, cautious investor sentiment, and fluctuating government borrowing needs.
