FINANCIAL institutions this week launched a fierce bid for deposits in a cash-strapped market which dealers forecast short to the tune of $4,5 billion yesterday.
Dealers said fina
ncial institutions were scrambling for cash to buy compulsory stabilisation bonds from the central bank ahead of today’s deadline.
The financial institutions, which doled out $65 billion for the bonds before the holding thresholds were increased by 15 percentage points from 10% to 25%, are expected to release a further $100 billion for the bonds.
Rates for the seven to 14-day investments, which had been sitting at 0% interest, surged to 300%, while 30-day investments, which had been attracting interest of between 10% and 15%, were buoyant at 300%.
There were positive movements on the 90-day investments whose rate also surged to 300% from 50%, the highest rate the market had been offering before financial institutions started bidding for cash.
The market opened the week short to the tune of $8,4 billion on Monday and was down $3 billion on Tuesday.
The shortages intensified on Wednesday, reaching $12,5 billion.
Dealers indicated that the money market, which had been struggling due to low interest rates, had been active during the week as investors moved hot funds from the equities to the money market on firming rates.
The equities market, whose key index shed 20% on Wednesday, adding to a run of losses during the week, closed the day down 2,63% yesterday.