1 AUGUST 2001

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Money market report for week ending 27 July 2001
Monetary Policy Council Leaves Rates Unchanged
Central Bank Monetary Operations

The Monetary Policy Council of the Central Bank of Malta held its monthly meeting on Friday 27 July and decided to leave the Discount Rate and the Central Intervention Rate unchanged at 4.75%. Thus, the absorption rate band of 4.70% - 4.75% and the injection rate band of 4.75% - 4.80% were also left unchanged.

On the same day, the Central Bank conducted a 14-day Repo (injection) auction to mature on 10 August. The amount injected at Lm5.5 million, was significantly lower than the Lm20 million injected the previous week.

Moreover on Friday, there was a maturing Term deposit amounting to Lm0.5 million, resulting in a total injection of Lm6 million. Although the financial system was long, due to an excess on banks' settlement accounts, banks preferred to hold this excess in view of their commitment on 1 August to settle their allotment of the new MGS issue.

Inter-bank Market
During the week under review, no interbank deals were transacted, compared to the previous week's turnover of Lm2 million.

Malta Government Treasury Bills
In the Primary market for Treasury bills, the Government issued the equivalent of Lm 4 million in 28-day Treasury Bills. Given that there were no maturing Treasury Bills, the outstanding balance increased to an all-time high of Lm 188.7 million from the previous week's level of Lm 184.7 million.

At 4.9094%, the weighted average rate for the 28-day bills increased by 0.0532% over the previous level of 4.8562 %. The latest yield corresponds to a weighted average bid price of Lm 99.6248 per Lm100 nominal.

On Tuesday 31 July, the Treasury received applications for the tender of 91-day Treasury Bills maturing on 2 November 2001. These bills issued on Friday 3 August against a maturing amount of Lm13.6 million. For the following week, on Tuesday 7 August, the Treasury will receive applications for 182-day bills to be issued on Friday August 10 to mature on 8 February 2002.

Turnover in the secondary market for Treasury Bills amounted to Lm 0.097 million. All trading was conducted with the Central Bank in its role as market maker.

The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt