Liquidity management goes towards LLW, gradually

Central Bank of the Republic of Turkey (CBRT) gave 1 billion TRY to the market within the late liquidity window (LLW) repo. The Central Bank had left the one-week repo rate at 8.25% at its August policy meeting on Thursday and did not change the interest corridor.

Central Bank of the Republic of Turkey (CBRT), continues tightening steps taken by the liquidity management. In the statement made yesterday by the CBRT, "Within the framework of the tightening steps taken within the scope of liquidity management, a traditional repo auction amounting TRY 10 billion TRY was held. The maturity of the repo auction was determined as 23rd September 2020." In the statement, it was stated that traditional repo auctions may continue in the days when needed, and details of the auctions will be shared on data platforms. It was also stated that with the increase in the share of traditional repo auctions within the framework of liquidity management, the funding amount made by the CBRT in the repo markets within Borsa Istanbul on days deemed necessary may be reduced.

 

Central Bank of the Republic of Turkey (CBRT) gave 1 billion TRY to the market within the late liquidity window (LLW) repo. The Central Bank had left the one-week repo rate at 8.25% at its August policy meeting on Thursday and did not change the interest corridor.

 

We see that the CBRT used it as one of the methods to increase the weighted average funding rate. WACF, which is currently 9.61%, is increased in this way. In the statement, it is pointed out that the share of traditional repo in liquidity management has increased and the funding from the BIST repo market can be reduced, and we can infer that the share of traditional auctions will increase even more. It seems that the CBRT will raise the funding rate towards LLW with this method until the next meeting. As it is known, the CBRT reduced the banks' overnight borrowing facilities. This will lead banks to borrow from the more costly at Late Liquidity Window, as was done in previous CBRT administrations.

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