Higher Interbank Rates Are Linked to Liquidity Crunch

Interbank rates continued to rise for the fifth consecutive week, reaching 19.1% as of Sep. 23, up from 18.29% a month ago.
The rise is linked to shortage of liquidity in the interbank market. Weekly data released by the Central Bank of Iran shows a “meaningful increase” in the so-called structured interbank lending, which is seen as a sign of banks’ liquidity shortages. Structured lending refers to a process through which banks put up bonds as collateral with the CBI to borrow money.