The Reserve Bank has stepped up activity in the secondary bond market in order to boost liquidity
08 May 2020 - 09:57The Reserve Bank bought just more than R11bn in government debt securities in April as part of a bond-buying programme to boost liquidity in financial markets that are reeling from the effects of the Covid-19 outbreak.
The central bank, which announced its plan on the eve of the imposition of the 21-day lockdown, upped its holdings to just more than R20.6bn from R9.2bn in March, according to data released on Friday.On March 25, the Bank stepped up efforts to inject liquidity into local financial markets, which had been showing signs of stress amid the economic fallout of the coronavirus, seeing investors scrambling for cash and fleeing to safe haven assets.
These measures included the announcement that the Bank would begin buying government bonds in the secondary market — from banks and asset managers — after buyers for government bonds dried up and 10-year yields skyrocketed to records above 12%, from less than 9% in February. In morning trade on Friday the rand was 0.73% firmer at R18.46/$, with global markets finding support from hopes of easing US-China trade tension.
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