Interest rates are expected to remain elevated due to increasing demand for liquidity in the short-term market.

The yield on the treasury bills hit the 30% mark last Friday, December 27, 2024.

The rise in yields and bids for T-bills reflects investors' strong desire to lock in at a higher interest rate, particularly because of declining real returns and liquidity constraints.

Last week, the government accepted total bids of GH¢4.65 billion, exceeding its target and upcoming maturities of GH¢4.26 billion and GH¢3.28 billion, respectively.

Yields rose, with the 91-day increasing by 18 basis points to 28.04%, while the 182-day and 364-day bills rose by 11 basis points each, settling at 28.68% and 30.07%, respectively.

In November 2024, the government received GH¢21.5 billion of T-bills auctioned.

This fell short of the gross target of GH¢22.8 billion.

The government allotted all bids to exceed the refinancing obligation by 8.3%. However, it fell short of the target by 5.5% with a sustained risk of the uncovered auction in December 2024 as the refinancing obligation jumped to GH¢26.1 billion.

Investor demand for the T-bills increased by 27.2% month-on-month but remained insufficient to fully cover the high auction target for the month under review.

Unsurprisingly, yields remained on the uptrend, averaging 90 basis points (bps) across the T-bills with renewed near-term inflation uncertainty and persistent Treasury borrowing pressure as the main drivers.