Taiwan's money market remained generally stable on Tuesday, but liquidity was slightly tight. Fund management personnel indicated that due to foreign investors continuously selling Taiwan stocks and transferring funds abroad, the liquidity in the banking system has declined, and the distribution of market funds has become uneven.
Some banks reported that the number of institutions seeking funds in the market increased that day, the difficulty of interbank borrowing rose slightly compared to previous days, but the interest rates remained at recent levels.
The interbank borrowing interest rates for one-week loans from large banks to small and medium-sized banks were mainly between 1.40% and 1.41%, while rates for securities companies for one to two weeks ranged from 1.40% to 1.42%.
Banks Adjust Funds Through Central Bank's Time Deposits
Market insiders pointed out that due to recent large amounts of foreign exchange and securities settlements, some banks have encountered liquidity gaps, and hence are adjusting their seven-day central bank time deposits to supplement liquidity.
A funding coordinator from a major commercial bank stated that with the increased difficulty in market borrowing, banks first adjust central bank time deposits to meet short-term funding needs.
On Tuesday, Taiwan's central bank issued 245.05 billion New Taiwan dollars in time deposits, with the issuance balance reduced by 44.1 billion New Taiwan dollars.
According to central bank data, the scale of time deposits maturing this week reached 1.5392 trillion New Taiwan dollars, with 188 billion maturing on Wednesday, 233.4 billion on Thursday, and 415.3 billion on Friday.
Short-Term Commercial Paper Rates Remain Stable
In the short-term commercial paper market, traders reported that although market funds are not ample, most maturing funds could be rolled over.
The interest rate for one-month commercial papers before the end of the quarter is about 1.45%, and the cross-month rate is about 1.46%, both unchanged from the previous trading day.
According to data from the securities depository company, the 30-day short-term commercial paper weighted average transaction rate was 1.46%, with a transaction volume of 12.832 billion New Taiwan dollars.
RP Market Funds Still Ample
In contrast to the slightly tight interbank market, the Repurchase Agreement (RP) market remains relatively abundant with funds.
Securities firms indicated that the demand for funds from mutual funds, life insurance companies, and banks is stable, and most transactions can be successfully rolled over.
Government bond RP rates range primarily from 1.15% to 1.20%, while corporate bond RP rates are around 1.43% to 1.49%.
