High bids at Croat c.bank repo auction

Croatia's central bank accepted offers worth 3.5 billion kuna ($704.3 million) from local banks at its weekly reverse repo auction of finance ministry treasury bills on Wednesday.
Total bids in the amount of 6.21 billion kuna were almost as high as at the last auction, when they totalled 6.51 billion kuna, with bid rates varying from 3.60 to 4.30 percent and the weighted rate being 4.11 percent.
"I do expect a mild fall of interest rates after the auction, but boosted demand for the kuna ahead of Christmas holidays will push interest rates towards high levels in the coming period", said a money market dealer at a major local brokerage.
"I see interest rates at between 8.00 percent and 9.50 percent in December," the dealer added.
Strong interest at today's auction was in line with most market forecasts, as banks needed funds for mandatory reserve maintenance amid squeezed liquidity.
A money market dealer at a major local bank said "it has become quite a routine -- interest rates rising ahead of Wednesday's repo reverse auctions and then easing afterwards."
"Except there will be no major easing this time as intensified demand for kuna is usual for this time of year," she said.
Both market participants agreed the movement of interest rates was rather hard to predict, considering recent developments on the local financial and political scene, such as irregularity of reverse repo auctions, Nov. 25 parliamentary elections or pre-holiday consumption.
The central bank's reverse repo auctions consist of kuna-denominated T-bills with 91-, 182-, and 364-day maturities, which the finance ministry usually auctions on Tuesdays .