Interbank Rates at 7-Year High

Interbank rates continued to climb last week reaching the highest level in seven years. According to EcoIran Web TV, rates were up 0.1% during the week to April 5 to reach 23.46%. 
Interbank rates have shot up in the past two months. The choppy rates two years ago were seen as one key factor leading to the collapse of the share market. Experts say low interest rates drive liquidity out of banks to the bourse and vice versa.
Market observers are of the opinion that the increase in rates, among other things, is indicative of the liquidity crunch in banks operating in the interbank market despite the central bank’s efforts to tame the uptrend with expansionary policies.
Interbank rate is interest charged on short-term lending between banks. Banks borrow money from each other to ensure that they have enough liquidity for immediate needs, or lend money when they have excess.