The Croatian National Bank on Wednesday accepted all bank offers amounting to 158.1 million kuna at a reverse repo auction, at a fixed repo rate of 0.80 percent, as announced by the HNB.
At the sixth reverse repo auction since the end of September, through which the central bank influences kuna liquidity in the financial market and reduces interest rates, bank offers totaling 158.1 million kuna were received. The HNB accepted all submitted offers at a fixed interest rate of 0.8 percent, the same as at previous auctions. The repurchase date is November 11.
At the same time, 311.1 million kuna, which the central bank allocated to commercial banks at last week’s auction, is maturing today.
Through reverse repo auctions, the central bank influences the kuna liquidity of banks, thereby acting to suppress pressures on the rise of kuna interest rates in the money market. The financial market has reacted to the implementation of the legal solution for the conversion of loans linked to the Swiss franc (CHF) into euros by weakening the kuna against the euro and increasing interest rates. To influence the increase of liquidity in the system and the correction of market interest rates, the central bank announced at the end of September an open market operation through a reverse repo auction, which involves the purchase of securities by the HNB, with a simultaneous obligation to sell them on the agreed date.
The central bank also announced that to maintain exchange rate stability and satisfactory kuna liquidity, depending on need and assessment, it would intervene in the foreign exchange market by selling foreign currencies, and would also use existing monetary policy instruments such as repo operations.
