Interbank Rate Holds at 24% for 7 Weeks / Rate Returns to Corridor Ceiling + Table

After dipping to 20.58% in Farvardin, the interbank rate has returned to the corridor ceiling. From 4 Shahrivar to 16 Mehr, seven consecutive weeks at 24% have been recorded.

According to Ambassador Arjan, the S&D rate of the interbank market from the 4th of Shahrivar to the 16th of Mehr 1405 was 24% in all seven published observations. This stability has occurred after a period of rate reduction and increase; The path that started from 23.57% at the end of March 1404, went down to 20.58% in Farvardin and then reached the ceiling again in June.

The weekly data of money market rates show that the interbank rate was 21.36% on the 5th of April and 20.58% on the 12th of April. The distance between the last recorded rate and this floor is 3.42 percentage points. In May, the rate fluctuated at first, but it increased from the second half of the month and reached 23.81% at the end of May.

In the same period, the minimum repurchase agreement rate was 23%, the regular credit rate was 24%, and the regular deposit rate was 17%. Therefore, the return of the interbank rate to 24% has not been accompanied by an increase in the announced rates of the instruments.

Examining the longer period, from February 2019, shows that the level of the interbank rate has changed in the past years. This rate decreased to 17.95% in July 1400, crossed 23% at the end of 1401 and reached 24% in the second half of 1404 for consecutive weeks. The drop in April this year temporarily interrupted this durability; But the rate returned to the previous range in the following months.

How did the interbank rate return from the April floor to the corridor ceiling?

The interbank rate on March 27, 1404 was equal to 23.57%. The first observation of 1405, on the fifth of April, showed a rate of 21.36% and a week later this figure reached 20.58%. This value is the lowest rate recorded in this year's data until the 16th of Mehr.

After that, the rate increased to 21.45% on the 19th of April and to 21.97% on the 26th of April. On May 2, the rate was recorded at 23.31%, but this increase did not continue immediately; The rate decreased to 21.73% on the 9th of May and to 21.37% on the 16th of May.

From the 23rd of May, the rising path was formed again. On this date, the rate reached 23.24%; An increase of 1.87 percentage points compared to the previous week. Then, at the end of May, 23.81% was recorded and on June 6th, 23.91%.

The rate got closer to the ceiling in the following weeks and reached 24% on June 27th. In July and August, fluctuations were in the range of 23.83 to 23.99 percent. Finally, from the 4th of Shahrivar, all the observations until the 16th of Mehr were equal to 24%; That is, after the fluctuations at the beginning of the year, the rate was again at the ceiling of the corridor.

What did the interest rate level change between 1399 and 1404?

At the beginning of the remittance period, on 25 February 2019, the interbank rate was 19.85%. This rate reached 19.99% at the end of the same year, but decreased by 1400 in the first months. On the 17th of July 1400, the figure of 17.95% was recorded, which is the lowest observation in the entire data range provided.

In the rest of the year 1400, the rate increased again and reached 21.11% on the 9th of December. The end of the year was associated with a rate of 20.28%. In 1401, the rate was at first close to 20% and reached 21.31% in 30th of July; Then it decreased in August and increased again in the last months of the year.

At the same time as the corridor rates changed in Bahman 1401, the interbank rate went from 21.17% on the 12th of Bahman to 22.54% on the 26th of Bahman and crossed 23% on the 3rd of March.

In 1402, the recorded rates were in the range of 23.36 to 23.80 percent. In 1403, the rate changed from 23.48% in April to 23.98% in January and February. In 1404, the first figure of 24% was recorded on the 9th of Mehr and this value was repeated in all weekly observations until the 13th of March.

How did the interbank rate gap change with the repo rate?

The data of 1405 shows that the minimum repurchase agreement rate in all observations was 23%. The regular lending rate, which marks the ceiling of the corridor, was recorded at 24% and the regular deposit rate, at the floor of the corridor, was recorded at 17%. The distance between the ceiling and the floor of the corridor was seven percentage points during this period.

With these three rates remaining constant, the gap between the interbank rate and the minimum repo rate has changed. On April 12, the interbank rate was 20.58%; It means 2.42 percentage points lower than the minimum repurchase agreement rate. At the end of May, this relationship changed and the interbank rate was 0.81% higher than the minimum repo rate.

From the 4th of Shahrivar to the 16th of Mehr, this gap reached one percentage point. The interbank rate was 24% and the minimum repo rate was 23%. Therefore, the change in the distance between the two rates this year is caused by the movement of the interbank market rate.

These two rates belong to different transactions. The interbank rate is the reported rate of market transactions; On the other hand, the repo figure shows the minimum rate accepted in the repurchase agreement operation. Also, making the interbank rate equal to the corridor ceiling does not mean an increase in the ceiling; In this year's data, the market has returned to the existing stable ceiling.