BUNDESBANK ALLOCATES 6.1 BILLION MARKS IN TENDER
The Bundesbank accepted bids for 6.1
billion marks at today's tender for a 28-day securities
repurchase pact at a fixed rate of 3.80 pct, a central bank
spokesman said.
    Banks, which bid for a total 12.2 billion marks liquidity,
will be credited with the funds allocated today and must buy
back securities pledged on May 6.
    Some 14.9 billion marks will drain from the market today as
an earlier pact expires, so the Bundesbank is effectively
withdrawing a net 8.1 billion marks from the market with
today's allocation.
    A Bundesbank spokesman said in answer to enquiries that the
withdrawal of funds did not reflect a tightening of credit
policy, but was to be seen in the context of plentiful
liquidity in the banking system.
    Banks held an average 59.3 billion marks at the Bundesbank
over the first six days of the month, well clear of the likely
April minimum reserve requirement of 51 billion marks.
    The Bundesbank spokesman noted that by bidding only 12.2
billion marks, below the outgoing 14.9 billion, banks
themselves had shown they felt they had plenty of liquidity.
    Dealers said the Bundesbank is keen to prevent too much
liquidity accruing in the market, as that would blunt the
effectiveness of the security repurchase agreement, its main
open-market instrument for steering market interest rates. Two
further pacts are likely this month over the next two weeks.
    The Bundesbank is currently steering call money between 3.6
and 3.8 pct, although short-term fluctuations outside that
range are possible, dealers said.
 REUTER
