Kuwait central bank offers overnight funds

by Ulf Laessing Monday, 29 September 2008

The Central Bank of Kuwait has offered one-week and one-month overnight funds to lenders to signal it was ready to ensure sufficient liquidity after a recent bourse slide, bankers said on Monday.

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"Volumes are relatively small but it is good news because they signal to the market that they are there and ready to pump liquidity if necessary," one banker at a local lender told newswire Reuters.
Another banker confirmed the move, describing the volumes as "fairly decent".

The central bank, which said last week it was ready to add liquidity if necessary after a bourse slide, could not be immediately reached for comment.

Bankers said they expected interbank rates now to fall after having almost doubled since the central bank in August withdrew a facility guaranteeing the availability of dinars at a fixed rate on the interbank market.

In addition, the bourse fell last week and during most of the summer. The government partly blamed a flurry of capital increases, including a $4.5 billion offer by Mobile Telecommunications Co. (Zain), for sucking up funds. (Reuters)



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