Money market very liquid in 2010

The money market in 2010 had remained highly liquid with excess liquidity in the commercial banking system, according to the Central Bank.

It said that at the beginning of 2010, the commercial banks’ liquidity surplus stood at around Rs. 109 billion and increased to Rs. 124.3 billion towards the end of the year.

Accordingly, the total call money transactions volume declined by almost half in 2010 compared to the six per cent increase in 2009, while the inter-bank overnight call money rates declined considerably to a range of 7.83-9.43 per cent.

However, interbank Repo transactions (based on government securities) remained almost unchanged at the 2009 level, but with a noticeable decline in Repo interest rates to a range of 7.05 per cent, to 8.53 per cent, which was lower than the range of call money rates.

Further, transactions at the Central Bank’s Repo window rose, due to both the excess liquidity and the Central Bank’s continued action to mop up the excess liquidity. The Central Bank’s Reverse Repo window stayed dormant.