According to the central bank officials, the decision to go for the outright purchase -- a process of repurchasing treasury bills (TBs) owned by financial institutions before their maturity date to inject additional liquidity into financial market -- was taken after offer rate of rollover of repo touched a record 12.42 percent.
Along with the demand of fund that was over three times of the offered amount, the record interest rate that the financial institutions offered in repo -- lending by central bank against government bills -- itself reflected the gravity of liquidity crunch, said Lila Prasad Niraula, executive director of NRB.
"After the outright purchase of TBs, the total injection of liquidity made by the central bank will reach Rs 15 billion and we are hopeful that the amount will play a big role inn easing the persisting liquidity crunch," he added.
The worsening liquidity crunch further fueled the inter-bank lending rate to over 14.5 percent on Wednesday and some concerned officers fear the rate might touch 15 percent by the end of this week.
Related story
IBN signs an agreement with Dabur Nepal to allow it to inject a...
