SA Reserve Bank to buy goverment bonds to inject liquidity into market
The move follows an initial raft of interventions announced last week to provide lenders with cheaper access to funding
SA Reserve Bank to buy goverment bonds to inject liquidity into market
The South Africa Reserve Bank (SARB) has introduced additional measures to manage liquidity in financial markets during the COVID-19 crisis, including the purchase of government bonds on the secondary market.
This follows an initial raft of interventions announced last week to provide lenders with cheaper access to funding, and reorganise the way it injects liquidity into the financial system, Bloomberg reported. At the time the bank said it would assess the liquidity management strategy on a continual basis.
The Reserve Bank announced on Tuesday that it will be buying government bonds from the secondary market; not directly from Treasury which is the primary market. The amount and maturity of the bond purchases will be at the discretion of the SARB.
“That will also inject liquidity into the market and also help to relieve some pressure in the bond market that is currently being experienced,” said Samantha Springfield, acting senior manager: market operations and analysis at SARB.
