Bank liquidity: deficit widens by 9%

According to BMCE Capital Global Research (BKGR), the bank liquidity deficit widened in the previous week by 9%, compared to its level a week earlier.

“In response, Bank Al-Maghreb (BAM) increased its 7-day advances by 21% to 36.92 billion dirham (MMDH) at a time when treasury investments strengthened significantly to almost 40.8 MMDH instead of 7.95 MMDH a week earlier due to the payment of the ISIS deposit which increased treasury revenues”, BKGR said in its recent monetary and bond letter.

Besides, the same source added that under these conditions, the weighted average rate remains aligned with the policy rate by stabilizing at 1.5%.

‘’In the primary market, at the last auction scheduled for settlement on October 11, the treasury issued 2.5 MMDH in the form of bills through auctions on the 2-year line at the limit rate of 1.74%’’, BKGR said, adding that under these conditions, the primary curve edged down slightly following the decline in the 2-year line rate from 0.6 pbs to 1.73%.

As for the secondary market, it showed less dynamism this week, with overall volume down 36% to 16.9 MMDH, which was polarized to the tune of 41% by long-term maturities.

The secondary curve increased overall following the increase in the rate on the 52-week line from 2.8 pbs to 1.58% and the 2-year line from 2.0 pbs to 1.73%.

“In the next period, BAM will further reduce its monetary device with the issuance of only 27.76 MMDH in the form of 7-day advances, a decrease of 25% compared to a week earlier”, BKGR estimated. Taking into account the 9% decrease in treasury funding requirements for the month of October, interest rates are expected to remain at their current level.

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