SHORT-term rates are expected to remain stable next week on Bank Negara Malaysia’s (BNM) operations to absorb surplus liquidity in the cash market.
For the week just ended, the overnight Islamic reference rate settled at 2.48%, while the one-, two- and three-week rates finished the week at 2.54%, 2.58% and 2.6%, respectively.
Throughout the week, BNM intervened on a daily basis to reduce excess funds from the financial system by conducting tenders, including conventional money market tenders, Murabahah money market tenders, Islamic range maturity auction tenders, Qard tenders, and Bank Negara Interbank Bills.
Bank Negara Malaysia, on Tuesday, slashed its benchmark overnight policy rate by 25 basis points (bps) to 2.50% to provide a more accommodative monetary environment to support the projected improvement in economic growth amid price stability.
This was the second rate cut after the central bank surprisingly cut the benchmark rate by 25 bps during its first meeting for this year on Jan 22.
The total liquidity surplus in the conventional system for the week decreased to RM22.86 billion from RM26.05 billion last Friday, while in the Islamic system, it depreciated to RM10.63 billion from RM18.33 bil. – March 7, 2020, Bernama