GERMAN CALL MONEY DROPS BACK AT MONTH START
Call money rates fell to 3.85/95 pct
from five pct yesterday in moderate trading as month end
tightness disappeared and operators took positions for April.
    Dealers said they expected rates to remain within a 3.70 to
four pct range this month. A minor tax payment period on behalf
of customers mid-month, the long Easter weekend and pension
payments were unlikely to tighten rates significantly.
    Next Wednesday, 14.9 billion marks are leaving the system
on the expiry of a securities repurchase pact. But dealers said
they expected the Bundesbank to fully replace the outflow with
a new tender at a fixed rate of 3.80 pct.
    Commerzbank AG's management board chairman Walter Seipp
called on the Bundesbank to reduce interest rates to protect
the mark through bringing the allocation rate for securities
repurchase agreements down.
    But dealers said the Bundesbank was unlikely to ease credit
policies at the moment. There was little domestic and foreign
pressure for lower rates and no signs of a change.
    Yesterday one or two large West German banks effectively
drained the domestic money market of liquidity in order to
achieve higher rates from their overnight deposits, dealers
said.
    Bundesbank figures showed banks held an average daily 50.7
billion marks in minimum reserves at the central bank over the
first 30 days of March, the exact requirement needed just one
day before the end of the month.
    Actual holdings on Monday were 42.0 billion marks.
    Because rates soared to the level of the Lombard emergency
funding rate yesterday, banks fell back on the loan facility to
draw down a high 5.3 billion marks in an attempt to meet
Bundesbank needs, the data showed.
 REUTER
