The treasury bill auction on July 11 saw a rare increase in interest rates across the board as the 91-day, 182-day, and 364-day cleared at 14.6596%, 15.0289%, and 15.4192% respectively. This was a marginal rise from the previous auctions rates of 14.5669%, 15.0192% and 15.1679%.

Total bids of GHS 6.13 billion were tendered out of a target of GHS 7.53 billion, an 18.6% under-subscription. This follows last week’s target miss of 11.6%. Out of the bids, a total of GHS 4.54 billion was accepted, suggesting that many investors had bid at even higher rates.

Given the sharp drop in inflation recorded in June, treasury bills have become a more attractive investment. The under-subscriptions therefore suggest a lack of liquidity resulting from the combination of tight fiscal and monetary policies. Liquidity conditions are expected to be a bit less tight in the second half of the year as the president has promised to pay debts to road contractors starting this month. Coupons for restructured domestic bonds are also due to be paid in August.

The target for the next auction is GHS 5.44 billion.