Serbia’s central bank will restart reverse repo operations at an auction tomorrow as it seeks to drain excess liquidity from the banking industry, according to a note published in the Official Gazette.
The Belgrade-based Narodna Banka Srbije on Dec. 14 raised its benchmark interest rate, the one-week repurchase rate, by 30 basis points to 11.25 percent and decided to restore reverse repo operations to mop up excess dinar liquidity from banks, fearing it could fuel prices and weaken the dinar.
The bank switched to direct from reverse repo operations on July 18 for the first time since the start of inflation targeting in 2006 after policy-tightening measures resulted in a liquidity squeeze.
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