News | Wednesday, 20 January 2010

Money Market Report for the week ended January 15, 2010

ECB keeps rates unchanged

On Thursday, January 14, the Governing Council of the European Central Bank (ECB) decided to keep the interest rate on its main refinancing operations unchanged at 1.00 per cent. Interest rates on the marginal lending facility and the deposit facility were also left unchanged, at 1.75 per cent and 0.25 per cent, respectively.
On Monday, January 11, the ECB announced its weekly Main Refinancing Operation (MRO). This auction, which was conducted on Tuesday, attracted bids for €60.08 billion from euro area eligible counterparties, €6.06 billion more than the amount bid for in the previous week. The bid amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 1.00 per cent in accordance with the current ECB policy.
Also on Monday January 11, the Eurosystem and the Swiss National Bank (SNB) conducted a EUR/CHF foreign exchange swap, with a seven-day maturity, to provide Swiss franc liquidity against euro. This operation attracted bids for €1.57 billion, and since this was well below the intended amount of €25 billion, all bids were allotted in full at a fixed price of -0.49 swap points.
On Wednesday, January 13, the ECB, in conjunction with the US Federal Reserve, conducted a seven-day US dollar funding operation through collateralised lending. This attracted bids for $1.15 billion, which amount was also allotted in full at a fixed rate of 1.12 per cent.

Domestic Treasury Bill Market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on April 16, 2010 and 182-day bills maturing on July 16, 2010. Bids for €79.91 million were submitted for the 91-day bills, with the Treasury accepting €9.44 million, while bids for €61.69 million were submitted for the 182-day bills, with the Treasury accepting €17.42 million. Since €47.85 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €21 million to €447.68 million.
The yield resulting from the 91-day bill auction was 1.3 per cent, 1.9 basis points below that on bills with a similar tenor issued on January 8, 2010. The latest yield on such bills represented a bid price of 99.6725 per 100 nominal. The yield resulting from the 182-day bill auction was 1.363 per cent, i.e. 3.6 basis points lower than that on bills with a similar tenor issued on January 8, 2010. The yield on these bills represented a bid price of 99.3156 per 100 nominal.
On Tuesday, the Treasury invited tenders for 91-day bills maturing on April 23, 2010.
Treasury bill trading on the Malta Stock Exchange amounted to €4.23 million during the week, with a marginal €0.3 million worth of trades being conducted by the Central Bank of Malta in its role as market maker.

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