August primary liquidity expected to be $475M

Press, 6 August 1987, Page 32

August primary liquidity expected to be $475M

PA Wellington Primary liquidity for August is expected to be about $475 million, according to the deputy governor of the Reserve Bank, Mr Lindsay Knight This was above July’s average of around $340 million, he said. During August primary liquidity would be at its lowest in the early part of the month with the maturity of early August Treasury bills. The level would subsequently rise to a peak of about $B2O million as the September securities enter primary liquidity. Mr Knight emphasised that the build-up in prim-

ary liquidity during August was the counterpart of the large withdrawals from the system forecast over the September tax drain period and should not be interpreted as a loosening of monentary policy. The primary liquidity levels at the end of September could be expected to return to around the average levels seen in June and July. Current forecasts indicated that the payments of provisional tax by companies and individuals should be in the range of $9OO million to $llOO million. Mr Knight said that the forecast net public sector

injection before Government stock tender settlements, Treasury bill tenders and open market operations in August was $1095 million. This was largely due to a net fiscal injection of $6OO ’ million and $750 million of Government securities entering primary liquidity during August which was partly offset by $225 million of outstanding sellback maturities. The effect of estimated Government stock settlements together with simulated tenders and open market operations during August is to reduce the net public sector injection to $515 million.