The past week on Slovakia’s interbank market was marked with the coming end of the January period of meeting the minimum reserve requirement. On the last day of the month commercial banks deposited SKK 19.119 billion in their reserve accounts in the central bank, meeting the requirement on a cumulative basis at 100.19 percent. The central bank set the minimum reserve requirement for February at SKK 21.436 billion.

` Since the Finance Ministry did not held a government bond auction this Monday, NBS sterilization repo was the main event of the week. Demand from commercial bank reached SKK 61.495 billion and the central bank accepted the full volume. The minimum and average yield stood at 6.49 percent p.a. and the maximum yield was 6.5 percent p.a. According to dealers, there were even bigger space for sterilization, but commercial banks were in defensive position due to the upcoming end of the January evaluation period for meeting the minimum reserve requirements. Prices of one-day deposits responded to results of the Tuesday’s repo tender and decreased to 5.0/5.2 percent p.a. and also prices of one to two-week money adjusted.

On Wednesday, SKK 55 billion arrived in the sector through maturing repo contracts with the central bank, while SKK 61.495 billion left via the current repo. Nevertheless, banks remained in a liquidity surplus. Some banks placed their excess liquidity in one-day sterilization repo deals in the central bank.

Excess liquidity in the sector that should rise by further SKK 11 billion through a maturing government bond issues on Monday will decrease in NBS repo deals and through a government bond issue. The Finance Ministry announced an auction of seven-year bonds with a 4.9-percent coupon for Monday. The ministry plans to acquire SKK 5 billion in the first auction of the SKK 15 billion open issue. Dealers say that the ministry will probably fail to meet the planned volume with regards to the low coupon. On Tuesday the central bank will hold a regular sterilization repo tender.