22 AUGUST 2001

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Money market report 13-17 August
Higher inter-bank market activity

Central Bank Monetary Operations
On Friday 17 August, the Central Bank of Malta announced a 14-day Repo (injection) auction to mature on 31 August. An amount of Lm28.5 million was injected at a fixed rate of 4.80%.

This injection was mainly the result of two factors: the repayment of maturing repos of Lm22 million (previously injected on the 3 August) and a net shortage in the reserve deposit accounts which the banks are legally bound to hold with the Central Bank. The "reserve requirement" is equivalent to five per cent (5%) of their deposit liabilities. The reserve requirement increased as a result of an increase in the deposits with the commercial banks During the period reviewed, the banking system made use of both the Marginal Lending Facility and the Overnight Deposit Facility to the amount of Lm2.3 million and Lm3.8 million respectively.

Inter-bank market
Turnover in the inter-bank market amounted to Lm12.5 million, more than double the amount of Lm5.9 million of last week. Transactions consisted solely in overnight deals, at a weighted average rate of 4.728%, compared to the previous rate of 4.7533% registered in June.

Malta Government Treasury Bills
During the week under review, Government invited tenders for 91-day bills in the primary market for Treasury Bills. An amount of Lm2 million was issued, roughly the same amount maturing during the same week. Thus, the amount of outstanding Treasury Bills remained virtually unchanged and closed the week at Lm178.18 million (as compared to last week’s figure of Lm178.19 million). The amount applied for was much higher than that issued, signalling a healthy Government liquidity position.

At 5.0900%, the weighted average rate for the 91-day bills dropped marginally on the previous level of 5.0998%. The current yield corresponds to a weighted average bid price of Lm98.7469 per Lm100 nominal.

On Tuesday 21 August, the Treasury received applications for the tender of 91-day Treasury Bills maturing on 23 November 2001. These bills will be issued on Friday 24 August, coinciding with a same day maturing amount of Lm4.61 million. For the following week, on Tuesday 28 August, the Treasury will receive applications for 28-day and 91-day bills to be issued on Friday 31 August to mature on 28 September and 30 November 2001 respectively.

Turnover in the secondary market for Treasury Bills amounted to Lm0.07 million, compared to the Lm6.57 million of the previous week. 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