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(Seoul=Yonhap Infomax) Hye Rim Pi – South Korea’s short-term money market is expected to show an excess in reserve balances on the 20th.
On this day, reserve balances are set to increase due to fiscal disbursements of 1.8 trillion won ($1.36 billion), early buybacks of government bonds totaling 3.2 trillion won ($2.42 billion), and the maturity of 500 billion won ($378 million) in monetary stabilization deposits.
Conversely, factors reducing reserves include tax revenue inflows of 1.8 trillion won ($1.36 billion) and 500 billion won ($378 million) in monetary stabilization deposits.
A money market official commented on the call market, stating, “With government bond buybacks, reserves will likely remain in surplus. Although the weekend is approaching, borrowing demand is not expected to be strong.”
Regarding the repo market, the official added, “Liquidity outflows are anticipated due to subscription refunds. The strength of bank purchases will depend on the initial interest rate level, which will determine the intensity of demand for general bonds. The matching speed between general bonds and credit instruments is expected to remain variable.”
On the previous trading day, factors increasing reserves included fiscal disbursements of 1.4 trillion won ($1.06 billion), the maturity of 1 trillion won ($756 million) in Bank of Korea repo sales, early redemption of 1.7 trillion won ($1.29 billion) in Monetary Stabilization Bonds, and the maturity of 500 billion won ($378 million) in monetary stabilization deposits.
Factors reducing reserves were tax revenue inflows of 1.4 trillion won ($1.06 billion), 1 trillion won ($756 million) in Bank of Korea repo sales, 100 billion won ($75.6 million) in monetary stabilization accounts, 2.3 trillion won ($1.74 billion) in new Monetary Stabilization Bond issuance, 3.2 trillion won ($2.42 billion) in public fund withdrawals, and 500 billion won ($378 million) in monetary stabilization deposits.
As a result, the previous day’s reserve balance showed a surplus of 9.63 trillion won ($7.28 billion), with the cumulative reserve balance (“reserve accretion”) at a surplus of 6.83 trillion won ($5.16 billion).
The overnight call rate was recorded at 2.514%, with a trading volume of 14.25 trillion won ($10.77 billion).
(※“Reserve accretion” refers to the cumulative sum of daily excess or shortfall in banks’ required reserves over a certain period. It represents the total balance of reserves accumulated each day. Banks’ actual reserves may exceed or fall short of the required amount. A large surplus in reserve accretion indicates ample liquidity in the market, while a significant shortfall suggests a liquidity squeeze.)
phl@yna.co.kr
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