The Bank said the ‘minor amendment’ will not have any adverse effect on liquidity operations
The SA Reserve Bank said on Friday that it will reduce overnight repo auctions to one per day from the two it has held since early March to inject liquidity into the banking system amid the coronavirus pandemic.
Early in the Covid-19 pandemic, banks and investment firms saw a rapid increase in redemptions and margin calls as nervous investors looked to pull their money out, while increasing bid-offer spreads made buying and selling difficult. The Bank’s data on Friday showed it had bought R11.42bn worth of government bonds during March and April, bringing its total holding to R20.64bnThe bank has not set a target for government bond purchases but some analysts think it could reach as much as R100bn to help plug a government funding gap.
“The bank’s lowering of liquidity requirements and additional repo auctions have narrowed spreads in short-term money market rates, or the thee-month Johannesburg interbank average rate .
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