Fourth bill sale

Press, 20 December 1985, Page 10

Fourth bill sale

PA Wellington The Reserve Bank was active in the money market again yesterday, selling S6OM worth of Treasury bills. It was the fourth day of bill sales on the open market as part of the Government’s policy of ensuring that any spare cash in the banking system is attracted into state coffers.

Yesterday’s yields were slightly below those paid at a similar open market sale of bills oh Wednesday. Yesterday S2SM of 26-day bills sold at 17.99 to 18.13 per cent, with a weighted average of 18.05 per cent. Thirty-five million dollars of 35-day bills sold at 18.48 to 19 per cent, with an average of 18.57 per cent.

The bank has described the open market bill sales as the “fine tuning” to its the programme of monthly stock tenders and weekly Treasury bill tenders. Each morning the bank calculates the estimated cash in the bank system. If liquidity seems high, it contacts banks, merchant banks, insurance companies, stockbrokers and other money market dealers with an offer to sell bills. Bids are taken and the results of the open market operation are declared by midmorning, with settlement of the sales later in the day. The bank occasionally adopts the reverse process and buys bills from, dealers if the banking system is short of cash.