By Garfield Reynolds
Sept. 22 (Bloomberg) -- The Reserve Bank of Australia added A$2.025 billion ($1.7 billion) to the financial system, amid concern credit market jitters may deter banks from lending to each other.
The bank last week added an average of A$2.5 billion a day through so-called repurchase agreements, according the RBA Web site. Banks were holding A$6.90 billion in exchange-settlement accounts at the end of Sept. 19, down from A$6.97 billion on Sept. 18. The RBA injected a daily average of A$993 million in the first seven months of this year.
Australian banks' borrowing costs declined from the highest in six months, according to a gauge that measures the availability of funds in the market.
The difference between the rate banks charge each other for three-month loans and the overnight indexed swap rate stood at 80.5 basis points at 10:14 a.m. in Sydney, down from 92.5 points on Sept. 19, Bloomberg data show. A basis point is 0.01 percentage point.
In repos, central banks typically buy debt securities for a set period, temporarily raising the amount of money available in the banking system.
Repos help maintain enough money in the system to keep overnight interest rates close to the central bank's target. They don't signal a policy shift.
To contact the reporter on this story: Garfield Reynolds in Sydney at greynolds1@bloomberg.net
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