14 September 2005

The Web

Slight increase in outstanding term deposits

Money Market Report for week ended Friday, 9 September 2005

Surplus liquidity in the banking system increased slightly in the week under review when compared to the previous week. The main reasons for this increase were Government direct credits amounting to Lm12.4 million and net maturing Treasury bills amounting to Lm2.7 million. Partially offsetting this increase in liquidity was a negative clearing of cheques amounting to Lm4.3 million and currency withdrawals of Lm1.9 million.
Accordingly, on Friday 9 September, the Bank conducted a 14-day term deposit auction. An aggregate of Lm24.9 million was absorbed from the banking sector, Lm1.9 million more than the Lm23 million worth of term deposits that matured on the same day. As a result, the Bank’s outstanding term deposits increased slightly from Lm52.3 million to Lm54.2 million. The rate resulting from the latest auction was 3.20%, being the floor of the interest rate band (3.20% - 3.25%) at which the Bank conducts its auctions.

Interbank market
During the week under review three deals amounting to a total of Lm5.1 million were transacted, a sharp decrease from the Lm14.1 million worth of deals effected the previous week. Deals were transacted in the overnight, one-week and one-month tenor.

Treasury bill market
In the primary market, the Treasury invited tenders for 91-day Treasury bills to mature on 9 December 2005. From the Lm20 million worth of bids submitted only Lm7.7 million were accepted by the Treasury. Given that Lm10.4 million worth of bills matured during the week under review, the outstanding balance of Treasury bills decreased by Lm2.7 million, from Lm189.4 million to Lm186.7 million.
The latest three-month rate resulting from this auction was 3.2608%. This was 0.2 basis points lower than the previous 91-day rate for bills issued the previous week. The latest rate reflects a bid price of Lm99.1936 per Lm100 nominal.
On Tuesday, the Treasury received applications for 182-day bills to mature on 17 March 2006. For the following week, the Treasury will accept bids for 273-day bills to mature on 23 June 2006.
Turnover in the secondary market decreased from the previous week’s level of Lm1.2 million to Lm0.4 million. All trading was effected by the Bank in its role of market-maker.

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