15 August 2001

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Money market report 6-10 August

- short-term liquidity picks up

Central Bank Monetary Operations
Short-term liquidity picked up in the period under review, mainly due to the cumulative excess position in the Reserve Deposit accounts which the banks are legally bound to hold with the Central Bank.
Accordingly, on Friday the Central Bank conducted a 14-day Term Deposit auction in order to absorb the excess liquidity from the banking system.
However no bids were submitted during the auction as banks squared their long and short positions in the inter-bank market.

Inter-bank market
During the week under review, the inter-bank market registered a turnover of Lm5.9 million following two weeks of non-activity.
Deals consisted solely in 7-day tenor, with the weighted average rate closing at 4.7703 per cent, higher than the previous level of 4.7587 per cent.

Malta Government Treasury Bills
In the primary market for Treasury Bills, Government issued the equivalent of Lm0.4 million in 182-day Treasury Bills to mature on 8 February 2002.
This amount was well below the Lm7.3 million maturing on the same day. The volume of outstanding Treasury Bills thus decreased to Lm178.2 million from the Lm185.1 million of the week before.
This reduction reflects Government's improved cash flow position due to the latest primary MGS issue.
The weighted average rate for the 182-day tenor, at 5.0925 per cent, remained the same. This latest yield corresponds to a weighted average bid price of Lm97.5236 per Lm100 nominal.
On Tuesday 14th August, the Treasury received applications for the tender of 91-day Treasury Bills maturing on 16 November 2001.
These bills will be issued on Friday 17 August, coinciding with a same day maturing amount of Lm2.02 million. Moreover, on Tuesday 21 August, the Treasury will receive applications for 91-day bills to be issued on Friday 24 August to mature on 23 November 2001.
Trading in the secondary market for Treasury Bills amounted to Lm6.57 million, well above the Lm0.83 million of the previous week.
The bulk of trading took place outside the Central Bank, which in its role as market maker conducted net sales of Lm0.55 million.

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