South Africa’s central bank plans more reverse bond repurchases

JOHANNESBURG (Reuters) – South Africa’s central bank will extend its tool kit to manage market liquidity by adding short-term, bilateral reverse repurchases of government bonds from commercial banks, it said on Friday.

The South African Reserve Bank (SARB) has taken a number of measures since March to manage market liquidity as the spread of the coronavirus crisis globally hit demand for government bonds, including the launch of a bond-buying programme.

The bank has decided to expand such operations, it said in a statement, with changes to be introduced from Aug. 3.

“The SARB will commence conducting short-term buy-sell backs, of up to one month, with commercial banks on a bilateral basis for the purposes of managing money market liquidity,” it said, using a term for reverse repurchases.

The programme would be on an ad-hoc basis, it said, while the sum on offer would be at the SARB’s discretion.

It added that the SARB would also apply greater flexibility by allotting debentures and long-term reverse repurchases at a wider variety of rates.

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