Outright sale auction oversubscribed

KATHMANDU:

Securities floated by Nepal Rastra Bank (NRB), the central monetary authority, to absorb excess liquidity were

oversubscribed by over three times on Tuesday, indicating banks and financial institutions are still sitting atop quite

a significant chunk of cash. NRB, on Tuesday, launched an instrument called ‘outright sale auction’ to absorb Rs

three billion from the banking sector. It drew bids worth Rs 10 billion, a high-ranking NRB official said. The average

weighted interest rate on the securities, with maturity period of 139 days, was 0.88 per cent. The instrument floated

on Tuesday by NRB to mop up excess liquidity was used for the first time in one-and-a-half years. NRB’s Open

Market OperationBylaw allows the central monetary authority to conduct regular open market operations, emergency

fine-tuning operations and strategic open market operations to mop up or inject liquidity in the banking system.

Under these operations, NRB can float different instruments with maturity period of various lengths to ensure excess

or shortage of liquidity does not pose a threat to the financial system.

Source: THT