Median interbank rate dips to 8.9 percent

CAIRO: The median overnight interbank rate on the pound dipped to 8.9 percent on Wednesday from 8.972 percent on Tuesday as the absence of central bank auctions pumped liquidity into the market, traders said. It is going down because there are no auctions today, one dealer said. The rate slide followed a similar decrease on Tuesday when traders had ignored a large central bank auction for 7-day certificates of deposit because it was replacing a maturing issue, and not siphoning fresh funds from the interbank market. Banks tend to prefer to invest in typically higher-yielding central bank instruments, either treasury bills or certificates of deposit, but revert to trade on the interbank in the absence of fresh auctions. Rates have been elevated in recent weeks as an unusually high number of central bank auctions for certificates of deposit stripped liquidity from the market. Many of those auctions were not replacing existing maturities. Five out of 10 banks contacted by Reuters reported a flurry of 15 overnight deals at rates between 8.5 and 9 percent, compared with rates of between 8.8 and 9.15 percent on Tuesday. One bank also reported dealing in 5-day money at a rate of 8.75 percent, while three others dealt in 6-day money at 8.85 and 9 percent. By 12 p.m. the pound had strengthened slightly to LE 5.7353 to the dollar, compared to Tuesday s closing weighted average of LE 5.7355.