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Reverse repo

The same repo transaction seen from the side lending the money: it buys securities with an obligation to sell them back and earns interest for doing so.

How to read the number

For an investor it is a way to place spare cash for a short term against collateral instead of holding it idle.

When the metric lies

The income depends on the money-market rate, and that rate moves quickly. Valuing such a position at yesterday's rate counts income that is already gone.

Also known as: reverse repurchase, cash placement through repo

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