March 13, 2020 / 12:26 AM / 20 days ago

Australia's central bank boosts liquidity as virus panic hits markets

SYDNEY, March 13 (Reuters) - Australia’s central bank injected an unusually large amount of cash into the financial system on Friday as panic selling across global markets driven by the coronavirus threatened to drain liquidity and push up borrowing costs.

In its daily money market operation the Reserve Bank of Australia (RBA) pumped A$8.8 billion ($5.52 billion) into the system through repurchase agreements, well above the estimated requirement of A$3.4 billion.

The money was leant for periods ranging from 17 to 95 days, with A$5.6 billion going at the longest date.

Reserves held by the RBA for financial institutions have been rising steadily for several days amid a general hunt for liquidity by banks globally.

“There’s definitely strains in the market, and the RBA has acted to add extra liquidity to offset that,” said Martin Whetton, head of bond and rates strategy at CBA.

The U.S. Federal Reserve on Thursday surprised by injecting $500 billion into the banking system there, and intends to add a further $1 trillion on Friday.

Earlier in the week, RBA Deputy Governor Guy Debelle said the bank had not seen much stress in the market, but that was before the latest plunge in global equities.

Australia’s main stock index was down 7% on Friday, bringing losses for the week so far to an eye-watering 20%.

$1 = 1.5946 Australian dollars Reporting by Wayne Cole; Editing by Sam Holmes

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below