Prepared by TERI for research and strategic-information purposes only. It is not investment, legal, tax or financial advice and does not state the position of the Bank of Tanzania. Daily rates and volumes are read from the published chart labels. WAR means weighted average rate; bps means basis points (1 bp = 0.01 percentage point). The reverse repo series in Chart 8 does not carry date labels in the text of the reports, so only the three latest weekly amounts the Bank states in words are used for conclusions; the longer series is shown for context and is approximate.
00 — OverviewExecutive Summary
The Bank of Tanzania says the weekly rate is "consistent with the Bank's policy stance". The data agree, and add a pattern worth knowing: liquidity is comfortable from Monday to Thursday and tight on Fridays.
Banks are using the Bank's 7-day reverse repo less (TZS 341.48bn → 272.98bn → 252.43bn, down 26% in two weeks) and the weekly average rate has eased from 6.52% to 6.47%, which points to slightly easier liquidity. Yet the Friday close is consistently 27 to 39 bps higher than earlier days, so the market is balanced on average but short at the weekend. That shape, not the average, is what banks and borrowers need to plan around.
- Rate: weekly close 6.79% (25 Sep) → 6.72% (2 Oct) → 6.75% (9 Oct); weekly average 6.52% → 6.47%, always inside the 4.75–7.75% corridor.
- Volume: TZS 867.55bn → 927.45bn → 748.35bn. Friday alone carries 33–39% of weekly volume (TICGL calc.).
- Central bank support: injections at the 6.25% CBR equal about 34% of the week's 7-day interbank volume, down from 39% three weeks ago (TICGL calc.).
- Macro backdrop: M3 grew 25.5% and private credit 33.0% to August, so structural liquidity remains ample even as the Bank tightens at the margin.
01 — Interbank Cash MarketThe 7-Day IBCM: Rates and Volumes
The 7-day Interbank Cash Market (IBCM) weighted average rate closed the week to 9 October at 6.75%, up from 6.72% and 6.79% in the two preceding weeks. Total 7-day trading volume was TZS 748.35 billion, down from TZS 927.45 billion and TZS 867.55 billion.
Daily 7-Day WAR vs the Central Bank Rate
Daily 7-Day IBCM Volume
| 7-day IBCM | Mon | Tue | Wed | Thu | Fri | Week |
|---|---|---|---|---|---|---|
| Wk 21–25 Sep: WAR (%) | 6.52 | 6.55 | 6.50 | 6.40 | 6.79 | n/a |
| Volume (TZS bn) | 146.2 | 52.5 | 135.7 | 246.6 | 286.6 | 867.55 |
| Wk 28 Sep–2 Oct: WAR (%) | 6.50 | 6.47 | 6.45 | 6.37 | 6.72 | 6.52 |
| Volume (TZS bn) | 159.6 | 76.0 | 160.2 | 221.1 | 310.6 | 927.45 |
| Wk 5–9 Oct: WAR (%) | 6.49 | 6.55 | 6.05 | 6.35 | 6.75 | 6.47 |
| Volume (TZS bn) | 153.1 | 60.5 | 1.0 | 242.5 | 291.3 | 748.35 |
Source: Bank of Tanzania, Charts 6–7 of the weekly reports. Weekly average WAR is as stated by the Bank for the last two weeks; the 21–25 Sep average is not stated. Daily volumes sum to the Bank's stated weekly totals.
1.1 The Friday effect
Friday WAR vs Monday–Thursday Average
- Consistent premium. Friday WAR was 30 bps above the Monday–Thursday average in the week to 25 Sep, 27 bps in the week to 2 Oct, and 39 bps in the week to 9 Oct.
- Volume follows rate. Friday handled 33.0%, 33.5% and 38.9% of weekly volume. Borrowing is concentrated when banks square positions ahead of the weekend, consistent with the Bank's note that a few banks seek to cover temporary shortfalls.
- The 7 October outlier. Volume collapsed to TZS 1.0 billion on Wednesday and the rate fell to 6.05%, the lowest of the three weeks. A rate set on one billion shillings is not a meaningful price; it coincided with a Treasury bill auction that day (Part 3 of this series).
02 — Reverse RepoThe Bank's Liquidity Window at the CBR
During the week to 9 October the Bank conducted 7-day reverse repo main operations, injecting TZS 252.43 billion at the 6.25% CBR to steer the operating target towards the policy rate. That compares with TZS 272.98 billion the week before and TZS 341.48 billion the week before that.
Weekly Reverse Repo Injections
Injection as Share of 7-Day IBCM Volume
Longer View: Latest 14 Reverse Repo Operations (Approximate)
2.1 What the pattern means
- Demand for central-bank liquidity is easing. Chart 8 shows operations above TZS 650 billion in earlier weeks, with a peak of about TZS 1,061 billion. Latest operations are a quarter of that. The Bank's September review had flagged higher reverse repo use from a few banks facing temporary shortfalls; that pressure appears to be fading.
- Full-allotment at the CBR caps the rate. Because the Bank provides liquidity at 6.25%, the interbank rate should not trade far above it unless banks run out of eligible collateral or prefer the market. The 6.72–6.79% Friday closes are above the CBR yet well inside the 7.75% Lombard rate, which is the upper limit of the corridor.
- Policy signal. The Bank is steering the operating target to the CBR, not widening the spread; the 22–27 bps gap between weekly average and policy rate is small and suggests the July increase to 6.25% has transmitted to the interbank market.
03 — Rate LadderWhere the Interbank Rate Sits in the Structure of Rates
The policy corridor and the money-market rate matter because they anchor everything else. Placing the weekly interbank rate among the Bank's other rates shows how the tightening is passing through.
The Interest Rate Ladder
| Rate | Level (%) | Date / source |
|---|---|---|
| Savings deposit rate | 2.77 | Aug-26, BoT monthly review Table A4 |
| 35-day T-bill yield | 3.36 | Auction 7 Oct, weekly report |
| 91-day T-bill yield | 3.49 | Auction 7 Oct |
| 182-day T-bill yield | 5.63 | Auction 7 Oct |
| Central Bank Rate (CBR) = reverse repo rate | 6.25 | Raised July 2026 |
| 364-day T-bill yield | 6.28 | Auction 7 Oct |
| 7-day IBCM weekly average | 6.47 | Week to 9 Oct |
| 7-day IBCM close | 6.75 | 9 Oct |
| Lombard rate (corridor ceiling) | 7.75 | Aug-26, Table A4 |
| Discount rate | 8.75 | Aug-26, Table A4 |
| Overall time deposit rate | 8.78 | Aug-26, Table A4 |
| Overall lending rate | 15.05 | Aug-26, Table A4 |
Source: Bank of Tanzania weekly reports (Table 5 and Charts 6–7) and Monthly Economic Review, September 2026 (Table A4). Lombard rate sits at the upper corridor band of 7.75%.
3.1 Reading the ladder
- Bills yield less than the policy rate at short tenors. The 35- and 91-day yields (3.4–3.5%) sit nearly 3 points below the CBR, while the 364-day (6.28%) matches it. Short bills are in high demand from banks with spare liquidity, which is consistent with comfortable liquidity at the short end even as the interbank market shows Friday tightness.
- The transmission gap is wide. The distance from the 6.47% interbank average to the 15.05% overall lending rate is about 8.6 percentage points. A 25 bps move in the CBR changes funding costs at the margin but does not change the lending rate quickly.
- Deposits are well above bills. Overall time deposits at 8.78% pay more than Treasury bills up to 182 days, so banks pay depositors more than short government paper earns, a gap worth including in any bank-margin analysis.
04 — OutlookLiquidity Conditions: What to Expect
Weekly liquidity data are a small window on a large system. The Bank's September review shows annual growth of 25.5% in extended broad money (M3), 28.1% in M2, 27.4% in reserve money and 33.0% in private-sector credit. Against that backdrop, the interbank market's modest tightness looks like a distribution issue (who has the cash and when) rather than a shortage.
Money and Credit Growth Behind the Weekly Data
| Signal | Reading | Direction for liquidity |
|---|---|---|
| Weekly average WAR vs CBR | +22 bps (was +27 bps) | Slightly easier |
| Reverse repo injections | TZS 252bn, down 26% in two weeks | Easier |
| 7-day volume | TZS 748bn, down 19% | Less turnover, ambiguous |
| Friday premium | +39 bps (was +27 bps) | Tighter at week-end |
| Bank dominance of T-bill auction (7 Oct) | Banks 99.98% of subscriptions | Banks absorbing government paper |
| Net foreign assets of the banking system (Aug) | TZS 13,575bn, falling | Tighter FX-linked liquidity |
4.1 What could change the picture
- The 14 October 25-year bond auction. Long-bond settlement moves cash from banks to the Government, usually lifting short rates and reverse repo demand for a few days afterwards. Watch Friday 16 October.
- Government spending and tax dates. Late-month tax payments drain liquidity; spending injects it. The weekly pattern of Friday spikes may become sharper at month-end.
- Foreign exchange operations. Dollar sales by the Bank to smooth the rate (USD 45.4 million net in August) drain shilling liquidity; Part 1 of this series shows interbank FX activity is currently thin, limiting that channel.
- Policy path. The CBR is reviewed quarterly. With inflation at 4.3% and core rising, further tightening cannot be ruled out, but the easing of reverse repo usage suggests no urgency to add stress.
For bank treasurers and corporates
- Plan funding Monday to Thursday; avoid relying on Friday for large overnight and 7-day needs.
- Expect a 25–40 bps Friday premium and quote it in internal transfer pricing.
- Do not read a single day's rate (such as 6.05% on 7 Oct) as a trend; check the volume.
For investors and project sponsors
- Use 6.25% (CBR) as the policy anchor and 6.5–6.8% as the short-term interbank band in financial models.
- Remember that bank lending rates (about 15%) are far above interbank rates, so project finance cost depends on credit spreads, not the CBR alone.
- Short bills at 3.4–3.5% suggest liquidity is available to banks; seek competitive local-currency bids for working capital lines.
"The market is not short of money; it is short of money on Fridays. Policy is working at the margin, and the real test is whether bank lending rates follow the policy rate, not whether the interbank rate does."
— TICGL / Tanzania Economic Research Institute (TERI)
05 — What TICGL DoesFrom Liquidity Data to Financing Decisions
Funding cost and liquidity assumptions sit inside every feasibility study, PPP proposal and market-entry plan. TICGL (Tanzania Investment and Consultant Group Ltd), with its research arm TERI, combines original economic research with practical advisory outputs across Tanzania and East Africa. Three technical service lines use the analysis in this report directly.
Feasibility Studies
- Pre-feasibility and full feasibility studies for PPP and private projects.
- Financial models with interest-rate paths, margin over CBR and debt-service coverage tests.
- Sensitivity ranges for local-currency borrowing costs and working-capital lines.
- Financing structure review: bank debt, bonds, pension-fund and PPP funding.
Market Entry Advisory
- Sector and location screening, including financing availability and cost.
- Working-capital and treasury planning for new entrants in Tanzania.
- Entry-mode choice, incentives and local-currency funding options.
- Partner, lender and supplier identification.
Market Research
- Weekly, monthly and quarterly financial-market monitoring from official sources.
- Sector outlooks with interest-rate and liquidity scenarios.
- Primary surveys and stakeholder interviews with banks, corporates and SMEs.
- Policy briefs, training materials and SEO-ready publications.
A project priced at the CBR is mispriced: the real cost of local-currency credit is the 15% lending rate. A refreshed funding-cost layer in a feasibility model or market-entry case takes little time and removes avoidable mispricing.
Talk to TICGL/TERI
Request a feasibility, market-entry or market-research scoping call, or a fuller briefing on this series.
What We Do → TICGL Markets → TERI Research → ✉️ economist@ticgl.com06 — SourcesMethod & Source Note
Source: Bank of Tanzania, Domestic Financial Markets Weekly Reports for 28 September–2 October 2026 and 5–9 October 2026 (Section 2: Charts 6–8; Section 3: auction yields of 7 October), plus the Monthly Economic Review, September 2026 (Tables 2.2.1, A3, A4). Friday premium (Friday WAR less the Monday–Thursday simple average), injection-to-volume ratios and two-week changes are TICGL/TERI computations from chart data labels. The longer reverse repo series is approximate: only the three most recent weekly amounts are stated in words by the Bank. Corridor: 4.75–7.75%, CBR 6.25%. This is Part 2 of a three-part series; Part 1 covers the foreign exchange market, Part 3 covers government securities.
07 — Quick AnswersFrequently Asked Questions
What is Tanzania's interbank cash market rate in October 2026?
The 7-day weighted average rate closed at 6.75% on 9 October, with a weekly average of 6.47%, within the 4.75–7.75% corridor and 22 bps above the 6.25% Central Bank Rate.
How much liquidity is the Bank of Tanzania injecting?
TZS 252.43 billion through 7-day reverse repo in the week to 9 October, down from TZS 272.98 billion and TZS 341.48 billion.
Why does the interbank rate spike on Fridays?
Friday WAR was 27–39 bps above the Monday–Thursday average in each of the last three weeks, with a third or more of weekly volume, consistent with banks covering weekend positions.
Is liquidity tight?
Balanced rather than tight: rates are slightly above the CBR and injections are shrinking, while broad money growth of 25.5% and private credit growth of 33.0% show ample liquidity overall.
What happens to liquidity around Treasury auctions?
Auction settlements move cash from banks to the Government. On 7 October interbank volume fell to TZS 1.0 billion and the rate to 6.05% on a T-bill auction day in which banks supplied 99.98% of subscriptions.
Muhtasari kwa Kiswahili
Soko la Fedha la Tanzania na Hali ya Ukwasi. Kwa mujibu wa ripoti mbili za wiki za Benki Kuu ya Tanzania (28 Sep – 9 Okt 2026), kiwango cha wastani cha soko la fedha kati ya benki (IBCM) cha siku 7 kilifunga wiki kwa asilimia 6.75, juu kidogo ya asilimia 6.72 wiki iliyotangulia. Wastani wa wiki ulikuwa asilimia 6.47, ndani ya ukanda wa asilimia 4.75 hadi 7.75 na pointi 22 juu ya Kiwango cha Benki Kuu (CBR) cha asilimia 6.25.
Kiasi cha biashara: Miamala ya siku 7 ilishuka hadi TZS bilioni 748.35 kutoka bilioni 927.45 (kushuka kwa asilimia 19.3).
Reverse repo: Benki Kuu iliingiza TZS bilioni 252.43 sokoni kwa CBR ya asilimia 6.25, ikilinganishwa na bilioni 272.98 na bilioni 341.48 wiki mbili zilizopita. Hii inaonyesha mahitaji ya ukwasi kutoka kwa Benki Kuu yanapungua.
Athari ya Ijumaa: Kila Ijumaa kiwango huwa juu ya wastani wa Jumatatu hadi Alhamisi kwa pointi 27 hadi 39, na Ijumaa hubeba theluthi moja au zaidi ya biashara ya wiki. Hii inaonyesha benki hubana nafasi zao kabla ya wikendi.
Tahadhari: Tarehe 7 Oktoba biashara ilishuka hadi TZS bilioni 1.0 na kiwango kuwa asilimia 6.05, siku ya mnada wa hati fungani za muda mfupi (T-bills). Kiwango cha siku moja kama hicho si ishara ya mwelekeo.
Ushauri: Wasimamizi wa fedha wapange mahitaji ya fedha kuanzia Jumatatu hadi Alhamisi. Wawekezaji watumie CBR ya asilimia 6.25 kama kiashiria, lakini wakumbuke riba za mikopo ya benki ni takriban asilimia 15. TICGL/TERI hutoa upembuzi yakinifu (feasibility), ushauri wa kuingia sokoni na utafiti wa soko.
Hitimisho: Soko lina ukwasi wa kutosha kwa jumla, lakini hubana siku za Ijumaa. Mnada wa hati fungani wa miaka 25 wa tarehe 14 Oktoba utaathiri ukwasi wa wiki ijayo.
- IBCM siku 7: 6.75% (9 Okt) · wastani wa wiki 6.47% · CBR 6.25%
- Kiasi cha wiki: TZS bilioni 748.35 (-19.3%)
- Reverse repo: TZS bilioni 252.43 (-26% katika wiki mbili)
- Athari ya Ijumaa: +27 hadi +39 bps
Chanzo: Benki Kuu ya Tanzania, Domestic Financial Markets Weekly Reports (28 Sep – 9 Okt 2026). Kwa maelezo zaidi: economist@ticgl.com.