Interbank Rate Upturn Continues

After notching higher in the past three weeks, updates by the Central Bank of Iran indicate that the interbank interest rate continued its upward trend this week.
Interbank rate rose by 0.24 percentage points to reach 18.74%, up from 18.5% last week. The rate is the highest since July 21.
The rise in interbank rates is linked to the shortage of lenders’ liquidity at the interbank market. The CBI’s data indicates a “meaningful increase” in the so-called structured interbank lending, which is seen as a signal of lenders' liquidity struggles.  Structured lending refers to a process through which banks put bonds as collateral with the CBI to borrow money.
Upsurge in interbank rates is a major issue of concern for asset markets investors as unusually high-interest rates in essence render investment in financial markets less attractive.