Median interbank rate rises to 8.65 percent

CAIRO: The median overnight interbank rate on the pound rose on Monday to 8.65 percent from Sunday s 8.416 percent with the market short after a recent central bank auction drained market liquidity, traders said. The market is very squeezed. Yesterday s auction absorbed all the liquidity in the market, one dealer said. On Sunday, the central bank auctioned off LE 813 million ($142 million) in 3-day certificates of deposit. The central bank was also due to auction off 182-day treasury bills worth LE 500 million on Monday. Banks tend to prefer to invest in higher-yielding central bank instruments, either treasury bills or certificates of deposit, but revert to trade on the interbank market in the absence of fresh auctions. Six out of 12 banks contacted by Reuters had dealt overnight money at rates of between 8.35 and 8.80 percent, compared with a range of 8.25 to 8.50 percent on Sunday. As on Sunday, no banks reported dealing in one-week money. The central bank effectively controls the range of overnight rates by offering 8 percent on overnight deposits and lending at 10 percent. By 10:12 GMT, the pound had slightly weakened to LE 5.7410 to the dollar, compared with Sunday s closing weighted average of LE 5.7409. Reuters