Central Bank Monetary Operations
On Friday, 9 March, the Central Bank of Malta conducted a seven-day term deposit auction absorbing Lm134.8 million from the banking system. This was Lm2.5 million less than the Lm137.3 million that matured on the same day. The interest rate that resulted from the auction was 3.95 per cent, which is the floor of the interest rate band at which the Bank is currently conducting its term deposit auctions.
The net injection of funds was in response to a slight decrease in liquidity in the banking system during the week under review. This was mainly due to purchases of Lm7.6 million worth of foreign currency against the Maltese lira and a Lm6.4 million net issue of Treasury bills.
Partly offsetting these factors was a surplus in the banks’ statutory reserve deposit accounts held with the Bank, Lm2 million in direct credits in respect of social security payments and a positive net clearing of cheques totalling Lm1.1 million.
Interbank market
No interbank deals were reported during the week.
Treasury Bill market
In the primary market for Treasury bills, the Treasury invited tenders for 273-day bills maturing on 7 December. Of the Lm20.6 million worth of bids submitted, Lm8.6 million were accepted. As Lm2.2 million bills matured during the week, the outstanding balance of Treasury bills increased by Lm6.4 million to Lm169 million.
The resulting 273-day rate from this auction was 4.2575 per cent, 2.3 basis points higher than the previous rate on similar bills, those issued on 9 February. This reflected a bid price of Lm96.9139 per Lm100 nominal.
On Tuesday, the Treasury invited tenders for 91-day bills maturing on 15 June, while the following week it will invite tenders in the same tenor for bills maturing on 22 June.
In the secondary market for Treasury bills, trading decreased to Lm2.1 million from the previous week’s level of Lm2.4 million.
Most of the week’s turnover, Lm1.4 million, was transacted with the Bank in its role as market-maker, while a further Lm0.7 million was transacted outside the Bank.