All-Out Growth in Iran Interbank Market

EghtesadOnline: The Central Bank of Iran has released its latest data on the country's interbank market, indicating that it has registered growth both in terms of the number and value of deals.

News ID: ۷۸۲۱۳۵

17 March 2018

According to the report published on its official website, 34,859 deals were made between banks and credit institutions during the first 11 months of the current fiscal year to Feb. 19 while the average daily value of all deals stood at 207 trillion rials ($4.25 billion).

With the total of 29,091 interbank deals with an average daily value of 110 trillion rials ($2.26 billion) registered during the same period of last year, the average number and value of deals this year have grown 19.8 and 88.2% respectively.

This is while the number of active players in the interbank market was 31 banks and credit institutions in the 11 months of last fiscal year and 30 in the same period of the current fiscal, Financial Tribune reported.

In the whole of the previous fiscal year to March 20, 2017, the total number of registered interbank deals was equal to 31,403 and their average daily value stood at 107 trillion rials ($2.2 billion), while 32 financial institutions were active in the market.

The average weighted interbank interest rate was registered at 18.7% during the 11 months of the current fiscal, which shows a slight reduction compared with the 18.6% of the same period of last year and the whole of last year. The weighted interbank interest rate of the 11th month alone stood at 18.1%.

Overnight deals constitute almost all of the interbank market's deals, but their share has been increasing. The deals grabbed a 98.4% share in the 11 months of the current fiscal, whereas their respective shares in the same period of last year and the whole of last year stood at 97.4% and 97.3% respectively. In the 11th month of this year alone, their share reached 99.1%.

The previous fiscal year began with an 18.9% weighted interest rate for interbank deals. While the rates dropped by 1% in the next three months, they embarked on a rising trajectory in the months after to end the year at a high of 19.2%. The rising trajectory continued in the current fiscal year when the initial three months saw the rates go as high as 20.3%, but then they declined and were registered at 18.1% for the five months ending Feb. 19.

The Iranian interbank market was established in July 2008 with the aim of strengthening the management of liquidity held by banks, facilitating short-term lending among banks, maintaining a suitable monetary discipline and improving the implementation of the monetary policies set by the regulator.

CBI has been in charge of organizing and supervising the market and intervenes in the market to maintain the optimal interbank interest rates.