BUNDESBANK ADDS MONEY MARKET LIQUIDITY
The Bundesbank came into the domestic
money market to add temporary liquidity through federal
government funds as call money rates rose above 4.0 pct,
dealers said.
    They estimated that the bulk of liquidity was added at
about 3.95 pct. Call money fell to 3.90/4.0 pct after the move.
It had been 3.80/90 on Friday.
    The move came as call money extended a rise begun Friday
after the Bundesbank took up some six billion marks owed to it
by other European central banks after currency interventions in
the framework of European Monetary System in January.
    Rates could ease further in trading today but dealers
expect them to rise later in the week as banks begin paying out
funds for tax payments on behalf of clients.
    Some 30 billion marks is likely to leave the market this
month, with the bulk being paid out next week.
    In anticipation of this liquidity drain, banks have stocked
up reserves at the Bundesbank.
    On Thursday, minimum reserve holdings declined to 57.0
billion marks from 60.0 billion on Wednesday but were well
above the 53.2 billion held on Tuesday. Daily average reserve
holdings rose slightly to 54.7 billion marks from 54.5 billion.
    The daily average reserve holdings were above the level of
around 51 billion marks dealers said is needed for the required
daily average for the month.
    With the heavy tax drain in March, banks are likely to
remain cautious about taking more liquidity out of reserves
than is absolutely necessary.
    However, a new securities repurchase pact likely to be
added next week to replace a facility expiring then could
somewhat offset the drain.
    The Bundesbank is expected to allocate more than the 3.4
billion marks which is due to be rolled over, dealers said.
 REUTER
