Money Market Report for the week ended 7 August 2009
ECB keeps rates unchanged
ECB Monetary Operations On Thursday, 6 August, 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 also remained unchanged, at 1.75 per cent and 0.25 per cent respectively.
On Monday, 3 August, the ECB announced its weekly Main Refinancing Operation (MRO). This auction, which was conducted on Tuesday, attracted bids for €80.78 billion from euro area eligible counterparties, €14 billion less than in the previous week and the lowest amount bid for in the past five years. All bids were allotted in full at a fixed rate equivalent to the main refinancing rate of 1.00 per cent in accordance with the current ECB policy.
On Monday, 3 August, the Eurosystem and the Swiss National Bank (SNB) conducted a EUR/CHF foreign exchange swap, with a 7-day maturity, to provide Swiss franc liquidity against euro. This operation attracted bids for €12.80 billion (which was slightly more than half the intended amount of €25 billion), and all bids were allotted in full at a fixed price of -0.86 swap points.
On Wednesday 5 August, the ECB, in conjunction with the US Federal Reserve, conducted another US dollar funding operation, this time with a tenor of 7-days. This attracted bids for $40.24 billion, which amount was allotted in full at a fixed rate of 1.16 per cent.
Domestic Treasury Bill Market In the domestic primary market for Treasury bills, the Treasury invited tenders for 182-day bills maturing on 5 February 2010. Bids for €58.24 million were submitted, with the Treasury allotting €51.67 million. Since €29.34 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €22.33 million to €613.65 million.
The yield resulting from the auction was 1.651 per cent, i.e. 14.8 basis points lower than that on bills with a similar tenor issued on 5 June, 2009. The latest yield represented a bid price of 99.1722 per 100 nominal.
On Tuesday the Treasury invited tenders for 91-day bills maturing on 13 November 2009.
Treasury bill trading on the Malta Stock Exchange amounted to €4.76 million during the week, with all trades being conducted by the Central Bank of Malta in its role as market maker.