As the year is coming to a close, the activity in the financial markets is subsiding, so the last week brought no surprises in the money market. There was no need for a treasury bills auction of the Ministry of Finance, while interest rates for t-bills with a maturity up to three months had a mild downward tendency.
On the other hand, interest rates on the opposite end of the ZIBOR are still at relatively high levels, thus reflecting lack of trading and caution by investors. The liquidity in the system is still high (close to HRK 5bn), but a clear message by the Central Bank that it will stay committed to the policy of stable kuna does not exclude the possibility of withdrawing a part of the liquidity in case of stronger depreciation pressures.
Author/Source PressCut – (RBA analysts)