Abduel Elinaza 12 December 2011 Bank overnight borrowing reached a 10-year high rate following tight money measures to contain the falling value of the shilling and high inflation rates. On average, the rate hit 27 per cent at the close of the week, which is the highest since the financial sector was liberalised over ten years ago when the rate was around 5 per cent. The Bank of Tanzania (BoT) inter-market report at the closure of the week shows that the market experienced the highest level of 35 per cent while the lowest was 15 per cent, all on the highest side ever. The report shows that despite high inter-bank rates the amount traded was also high at 57bn/- signifying liquidity demand in the market following tight monetary stance. Standard Chartered Bank said in its 'Daily Market' report on Friday that the inter-bank market remained under tight liquidity constrains with small banks picking overnight funds as high as 35 per cent on the close of business. "In a move to try putting a cap on overnight rates, BoT broadcasted its Lombard rate applicable today at 34.14 per cent, which is below the highest traded rate (Thursday)," said the report. According to stock exchange analyst, Joel Nkya the rate on average climbed almost by 10 per cent to reach 30 per cent last Thursday. National Microfinance Bank (NMB) attributed the high increase of the overnight rates to the tight money circulation stance that is geared to drive exchange rate to equilibrium. "Liquidity squeeze continued pushing the dollar further down with banks offloading their hard currency positions, driving the overnight rates to 30 per cent," NMB said in its Daily Market report. However, economists said the central bank's intervention was only a short-term solution as supplying foreign currency in the market and tightening money supply are not sustainable measures to control inflation and stabilise the shilling. Mzumbe University's Dar es Salaam Business School Senior Lecturer, Dr Honest Ngowi said high inflation and a weak shilling are double economic evils that Tanzania is struggling with. These two issues will be among the major economic issues of the year 2012.