ACI Ghana – Financial Markets Association weekly money market update – April 15, 2024

Below is Ghana’s money market update for the week beginning April 15, 2024.

KEY TAKEAWAYS

Short-term interest rates continued falling broadly. The yield on the 91-Day was up 1bp whilst 182-Day and 1-Year T-Bill rates fell by 8bps and 9bs to close at 25.74%, 28.15%, and 28.75% respectively. BOG 56-day bill rate remained stayed at 29.00% and interbank rate was up by 16bps to 28.74%.

Expected maturities for the week of April 15, 2024, include:

>> GHS 3.25 billion in Treasury Bill maturities comprising:

1. GHS 2.837 billion in 91-day maturities due on April 15^th
2. GHS 324.03 million in 182-day maturities due on April 15^th
3. GHS 87.81 million in 364-day maturities due on April 15^th

>> GHS 3.89 billion in 56-day Bill maturities comprising:

1. GHS 343.31 billion due on April 15^th

2. GHS 3.476 billion due on April 17^th

The Treasury Bill auction again saw weakened demand being undersubscribed by 8.81%. The Government accepted a total of GHS 2.56 billion, well below the auction target of GHS 2.80 billion.

Money Market Term(s) of the Week

Interest Rate Swap Arbitrage: Interest rate swaps are often used to exploit the so-called comparative advantage. This term was coined by David Ricardo, who in the 19th century developed the theory of comparative advantage for the international exchange of goods. Applied to financial markets, the theory says that the exchange of different interest rates can be profitable for both parties if they encounter different conditions on the different markets. This is even true, if one of the parties has better conditions on both markets, i.e. has a lower fixed and floating interest rate.