The South African Reserve Bank (SARB) announced of raft of emergency liquidity measures on Friday, including a lower rate for commercial banks to borrow money from the SARB, in a bid to ease the stress on banks caused by the coronavirus outbreak.
The move follows a 100-basis point cut to its main lending rate on Thursday to help the flagging economy and comes amid liquidity strains in funding markets.
“The Standing Facilities lending rate, the rate at which the SARB provides liquidity to the commercial banks, will be adjusted lower to the repo rate, from the prevailing rate of the repo rate plus 100 basis points,” the bank said in a statement.
“This will support banks to facilitate their flow of money market liquidity without being penalised.”
The central bank added that the measures were not to be taken as “providing any signals with regard to the future monetary policy stance”.
“The changes to the liquidity management strategy by the SARB are effective immediately and will be assessed on a continual basis.”
Other measures announced on Friday included daily fixed-rate auctions to provide liquidity to clearing banks, with an interest rate that is equal to the repurchase rate.
The bank said the additional money market liquidity would result in the current money market shortage declining below the current target level of 56 billion rand ($3.24 billion).