Central Bank Monetary Operations
During the 7-day term deposit auction held on Friday, 6 January, the Central Bank of Malta absorbed Lm87.9 million, which was a substantially larger amount than the Lm46.8 million worth of term deposits that matured on the same day. This marked increase in term deposits was in response to a significant increase in liquidity in the banking system during the week under review. This was mainly due to government direct credits of Lm8.8 million, mainly related to payments of pensions and children’s allowances, and net maturing Treasury bills worth Lm13.5 million.
Furthermore, there was a transfer of part of the Government’s Maltese lira Sinking Fund from the Central Bank to credit institutions.
Partially offsetting these factors was the purchase of Lm2.2 million worth of foreign currency against the Maltese lira by the credit institutions from the Central Bank of Malta. The interest rate resulting from the latest auction was 3.20 per cent, being the floor of the interest rate band (3.20-3.25 per cent) at which the bank conducts its absorption auctions.
Interbank market
For the second consecutive week no deals were transacted in the interbank market. This reflected the high level of liquidity prevailing in the banking sector.
Treasury bill market
In the primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on 7 April 2006 and 364-day bills maturing on 5 January 2007. Tenders for Lm11.1 million were accepted by the Treasury from the Lm27.2 million bids submitted for the three-month bill, while tenders for Lm8.4 million were accepted for the one-year tenor from the Lm27.5 million worth of bids submitted. Given that Lm33 million worth of bills matured during the week, the outstanding balance of Treasury bills fell by Lm13.5 million, from Lm190.2 million to Lm176.7 million.
The latest three-month rate resulting from the week’s auction was 3.2102 per cent. This was 0.5 basis points lower than the previous 91-day rate for bills issued on 30 December 2005. The latest rate reflects a bid price of Lm99.2060 per Lm100 nominal. The latest rate for the one-year tenor was 3.3210 per cent. This was 10 basis points higher than the previous one-year rate for bills issued on 25 November 2005. This rate reflects a bid price of Lm96.7943 per Lm100 nominal.
Yesterday, the Treasury received applications for 90-day bills maturing on 13 April 2006, while next week the Treasury will accept bids for 91-day bills maturing on 21 April 2006.
Turnover in the secondary market for Treasury bills increased slightly from the previous week’s level of Lm0.2million to Lm0.9 million. All trading was effected by the bank in its role of market-maker.
MaRIS Statistics for the month of December 2005
During the month of December, 3,717 payment messages were processed through the local Payment Systems, MaRIS, for a total value of Lm1,445.6 million. Of these, 1,624 were payments on behalf of customers for a value of Lm119.5 million, and 2,093 were interbank payments for a value of Lm1,326.1 million. The daily volume average for the month was 186 messages for a value of Lm72.3 million.
The peak day for the highest number of messages pro-cessed was 14 December, with 286 messages, and the peak day for value was registered on 2 December, with Lm250.5 million. Further details can be found on the Central Bank of Malta website: www.centralbankmalta.com