Money Market Report for week ending 19 January, 2001

Higher Inter-Bank Market Activity

Central Bank Monetary Operations
During the week under review, the banking system was characterised by low levels of liquidity. The shortage was mainly due to a big amount of maturing repos that had to be repaid to the Central Bank and the banks' participation in the primary market for Treasury Bills.
Accordingly, on Friday 19 January, the Central bank conducted a repo (injection) auction at a fixed rate of 4.80%. An amount of Lm50 million was injected in the banking system, which amount will be repaid to the Central Bank on 2 February 2001.

Inter-bank Market
At Lm5 million, inter-bank market activity was slightly higher than last week's figure of Lm4.7 million. The bulk of trading was conducted in 7-day money. Reflecting the shortage in short-term liquidity, the weighted average rate for 7-day money, at 4.78%, was slightly up on the previous week's rate of 4.7643%.

Malta Government Treasury Bills
In the primary market for Treasury bills, Government invited tenders for 364-day Treasury bills. An amount of Lm10.6 million was issued while there was no amount of Treasury bills maturing on the same day. During the same week, the Treasury bought back an amount of Lm10 million. This resulted in an outstanding balance of Lm168 million, practically on the same level of the previous week.
At 5.0552%, the weighted average yield for 364-day bills edged upwards from the previous rate of 5.0316% set on 9 June 2000. This latest yield corresponds to a weighted average bid price of Lm95.2006 per Lm100 nominal.
On Tuesday, 23 January, the Treasury received for the first time applications for the tender of 273-day (nine-month) bills to mature on 26 October 2001. These bills will be issued on Friday 26 January, coinciding with a same day maturing amount of Lm12.4 million.
For the following week, the Treasury will receive applications for 91-day bills to be issued on Friday 2 February to mature on 4 May 2001.
In the secondary market for Treasury Bills turnover amounted to Lm10.01 million, much higher than last week's volume of Lm3.24 million. The bulk of trading took place outside the Central Bank.