| BUNDESBANK ALLOCATES 6.1 BILLION MARKS IN TENDER | |
| The Bundesbank accepted bids for 6.1 | |
| billion marks at today's tender for a 28-day securities | |
| repurchase pact at a fixed rate of 3.80 pct, a central bank | |
| spokesman said. | |
| Banks, which bid for a total 12.2 billion marks liquidity, | |
| will be credited with the funds allocated today and must buy | |
| back securities pledged on May 6. | |
| Some 14.9 billion marks will drain from the market today as | |
| an earlier pact expires, so the Bundesbank is effectively | |
| withdrawing a net 8.1 billion marks from the market with | |
| today's allocation. | |
| A Bundesbank spokesman said in answer to enquiries that the | |
| withdrawal of funds did not reflect a tightening of credit | |
| policy, but was to be seen in the context of plentiful | |
| liquidity in the banking system. | |
| Banks held an average 59.3 billion marks at the Bundesbank | |
| over the first six days of the month, well clear of the likely | |
| April minimum reserve requirement of 51 billion marks. | |
| The Bundesbank spokesman noted that by bidding only 12.2 | |
| billion marks, below the outgoing 14.9 billion, banks | |
| themselves had shown they felt they had plenty of liquidity. | |
| Dealers said the Bundesbank is keen to prevent too much | |
| liquidity accruing in the market, as that would blunt the | |
| effectiveness of the security repurchase agreement, its main | |
| open-market instrument for steering market interest rates. Two | |
| further pacts are likely this month over the next two weeks. | |
| The Bundesbank is currently steering call money between 3.6 | |
| and 3.8 pct, although short-term fluctuations outside that | |
| range are possible, dealers said. | |