CBI Uses Reverse Repo To Absorb Excess Liquidity

In its weekly implementation of open market operations, the Central Bank of Iran conducted reverse repurchase agreement (reverse repo) operation for the first time. 
While the CBI has mainly focused on repo operations to inject money into the interbank market when implementing the monetary policy, the bank has done the opposite in the past three weeks by conducting the reverse repo, trying to absorb excess banks’ liquidity at the interbank market.
As a component of open market operation, repo is a form of short-term borrowing for dealers in government bonds. In the case of repo, a dealer sells government securities to investors, usually with short-term maturities, and buys it back at the maturity date at a slightly higher price.