Central Bank monetary operations
On Thursday, 28 June (Friday, 29 June being a public holiday), the Central Bank of Malta conducted an eight-day term deposit auction absorbing Lm71 million from the banking system. This was Lm23 million less than the Lm94 million that matured on the same day. The interest rate that resulted from the auction was 4.20 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 reduction in liquidity in the banking system during the week under review. The factors contributing to this were subscriptions to the Malta Government stock issues amounting to Lm47.8 million, a negative cheque clearing of Lm2.7 million and purchases of foreign currency by credit institutions amounting to Lm1.3 million. Partly offsetting these factors were sales of Malta Government stocks in the secondary market worth Lm6 million, direct credits totalling Lm3.6 million, a Lm2 million contraction in currency in circulation and the fact that credit institutions began the week with a surplus in their statutory reserve deposit accounts with the bank.
Interbank market
Five deals for a total of Lm8.8 million and in different tenors were struck in the interbank market during the week. One was conducted in the overnight tenor at a rate of 4.20 per cent, down by 3 basis points when compared to a deal in the same tenor that took place on 30 May. Another three deals were struck in the 7-day tenor at a weighted average rate of 4.277 per cent, up by 2 basis points from the weighted average rate on previous similar deals transacted on 22 June. Another deal was conducted in the 14-day tenor at a rate of 4.25 per cent. This was 23 basis points higher than the rate on a similar deal struck on 25 May, reflecting the 25 basis point hike in the bank’s Central Intervention Rate on 29 May.
Treasury Bill market
In the primary market for Treasury bills, the Treasury invited tenders for 29-day bills maturing on 27 July. Of the Lm15 million worth of bids submitted, Lm8 million were accepted. Since Lm8.3 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by Lm0.3 million to Lm196.2 million.
The latest one month yield resulting from the week’s Treasury bill auction was 4.296 per cent. This was 0.3 basis points higher than the rate on similar bills issued on 15 June and represented a bid price of Lm99.6551 per Lm100 nominal.
On Tuesday, the Treasury invited tenders for 182 days maturing on 4 January 2008. The following week the Treasury will invite tenders for 91-day and 364-day bills maturing respectively on 12 October 2007 and 11 July 2008.
Treasury bill trading on the Malta Stock Exchange amounted to Lm153,000, while Off-Exchange transactions amounted to Lm231,000. All the transactions were conducted by the bank in its role as market maker.
Malta Real-time Interbank Payment System (MaRIS) – June 2007
During the month of June, 4,312 payment messages were processed through MaRIS, for a total value of Lm1,927.4 million. Of these, 1,862 were payments on behalf of customers, for a value of Lm217.7 million, while 2,450 were interbank payments for a total of Lm1,709.7 million. The daily average volume for the month was 227 messages for a value of Lm101.4 million. The highest number of messages was processed on 18 June with 288 messages, while the highest value was registered on 15 June with Lm362.1 million.
Further details can be found on the Central Bank of Malta website: www.centralbank malta.com