Large RBA Drain Likely Reflects Govt Transaction

Forex News RBA open market operations show exchange settlement balance for Monday at A$752 million, lowest level since early days of credit crisis at August 9, 2007. However, central bank today injects A$710 million back into system, likely bringing ES balance back up to around A$1.5 billion, which roughly appears to be RBA's preferred ES balance level of recent months - up from A$700 million in pre-credit crisis days but well down from crisis peaks of A$7 billion. Large liquidity drain yesterday probably reflects big government transaction and is largely mechanical in nature; not necessarily a reflection of improved confidence in money markets or RBA's desire to rein in liquidity. 90-day bank bill rates down 2 bps at 7.74%.