Tuesday, December 28, 2010

Addendum to Monday's riddle

Kidneythief/AliG poses another question for Monday's riddle:
One question though: I believe the CBT might have supplied less liquidity on those particular days, which would limit volatility. However it chose not to in order to show the market that it means business. Am I right about this ?
He is right, to some degree. As I always say, a picture is more than a thousand words:
As you can see, there has definitely been that going on December 9th, but not on December 23. But starting December 24th, the Central bank's repo funding has started to retreat strongly. While the graph is only until Friday, the plunge has continued since then, with repo funding currently at around 11 billion liras.

But I think it may just be an end-year effect. Let's wait until next week and see what happens...

1 comment:

Kidneythief said...

Thanks, I second the year end effect idea.It is quite hard to spot anything this time of year!