GERMAN CALL MONEY FIRMS ON TENDER
Call money firmed to about 3.65 pct,
back to yesterday's 3.60/70 pct, from around 3.55 pct earlier
today after the Bundesbank announced a tender for a new
securities repurchase pact, dealers said.
    The Bundesbank offered funds over 28 days at 3.80 pct,
unchanged from the rate on recent facilities.
    Many traders had expected the tender rate to come down in
line with market rates for call money.
    When this did not happen, because of more than adequate
liquidity, many participants decided to withdraw funds from the
market and use them to build up minimum reserves further.
    This resulted in the slight rise in call money.
    Banks held 58.9 billion marks at the Bundesbank on April 5,
averaging 59.3 billion over the first five days of the month,
well clear of the likely 51 billion mark minimum reserve
requirement, dealers said.
    There was therefore some surprise that the Bundesbank was
offering more funds above the call money rate.
    But some dealers noted that the rate on the 28 day facility
was in line with one month money, which traded at 3.80/85 today
after 3.80/90 yesterday and 3.90/4.00 on April 1.
    Given market liquidity dealers said banks were likely to
bid, and the Bundesbank allocate, less than the 14.9 billion
marks draining from the market tomorrow when an earlier pact
expires.
    One dealer expected some 10 billion marks to be allocated.
    Some dealers said the Bundesbank would have been unwilling
to cut rates on this pact, as it is the first under its faster
and more flexible tender process and because a lower rate might
have been associated with the new system.
    Dealers said they still thought the Bundesbank would over
the next month lower the call money range from the narrow
3.6-3.8 and broad 3.5-4.0 pct it has held recently.
 REUTER
