The National Bank of Slovakia (NBS) said on April 23 that it envisaged one-month interest rates, the main rate it follows on the interbank money market, falling below 20 percent in the near future.
"The central bank is now mainly following one-month interbank interest rates, and we think keeping this rate under 20 percent is an achievable goal," said Peter Andresič, head of the central bank's open market operation department.
On April 23, one-month money opened at 18/18.3 percent, bid/offer, but dropped further to 17.7/18.2 percent in early afternoon trading due to an inflow of funds to the interbank market.
One-month deposit rates, which are less volatile than shorter maturities, hovered above 20 percent in the first few days of the current two-week reserve period, which ends on April 30, due to a liquidity shortage.
"The current cumulative shortage was caused by the shortage at the beginning of this period," Andresič said, adding that the current liquidity problems on the market were easing and that banks should be able to meet their minimum reserve requirements (PMR) in the period ending April 30.
"The liquidity situation has been improving in recent days and we expect it to keep improving until the end of the [PMR] period," Andresič said. "We do not expect the banking sector to have problems meeting the reserve requirements."
According to central bank figures, the banking sector as of April 23 still lacked 1.84 percent of the cumulative volume of funds needed to meet minimum reserve requirements.
The fulfilment of the reserve requirement is one of the central bank's main yardsticks for assessing money market liquidity and deciding whether to intervene through refinancing or reverse repo tenders.