June 30, 2014 / 7:15 PM / 4 years ago

UPDATE 1-Fed awards record amount of reverse repos

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NEW YORK, June 30 (Reuters) - The Federal Reserve awarded a record amount of reverse repurchase agreements to banks, money market funds and mortgage finance agencies on Monday, according to the New York Federal Reserve.

Investors piled money with the U.S. central bank on Monday as they looked for a safe place to store their cash as the second quarter comes to a close.

The U.S. central bank has ramped up testing of its fixed-rate reverse repo program which it created to help achieve its interest rate target when it decides to move away from its current near-zero rate policy.

The central bank on Monday issued $339.5 billion of these overnight loans to 97 bidders to whom it will pay an overnight rate of 0.05 percent, the New York Fed said on its website.

This was more than double the $140.9 billion the Fed awarded on Friday.

The prior peak for the Fed’s reverse repos awarded was $242.1 billion to 93 bidders on March 31, the last business day of the first quarter, New York Fed data showed.

Analysts expected the daily demand for the Fed’s reverse reps to subside after the new quarter begins.

“It’s mostly quarter-end related. People are looking to clean up their balance sheets,” said Gennadiy Goldberg, interest rate strategist with TD Securities in New York. (Reporting by Richard Leong; Editing by James Dalgleish and Chizu Nomiyama)

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