ECB's marginal MRO rate remains at 2008 peak level

On Monday, May 5, the European Central Bank (ECB) announced its weekly Main Refinancing Operation (MRO). This operation attracted bids for €229.3 billion from euro area eligible counterparties, with the ECB allotting €149.9 billion, or 65.4 per cent of the total amount bid for. The marginal rate, which is the rate at which the total tender allotment is exhausted, was set by the ECB at 4.26 per cent, unchanged from this year's highest rate resulting from the previous week's MRO. At this level the MRO rate was just below the record high level of 4.27 per cent reported on September 26, last year.

On Friday, May 2, the ECB also announced that, once again, in conjunction with the US Federal Reserve, it would provide dollar liquidity to the market through the Term Auction Facility (TAF). This was in order to help satisfy the exceptional need for dollar funding and to facilitate the further normalisation of conditions in the international money market. This operation attracted bids for $39.53 billion, of which $25 billion was allotted, 67 per cent higher than the $15 billion allotment ceiling set for previous TAF operations.

In the domestic primary market for Treasury bills, the Treasury invited tenders for 182-day bills maturing on November 7. Out of the €16.3 million worth of bids submitted, the Treasury accepted bids for €3.6 million. During the week €6.7 million Treasury bills matured, and following a buy back of €2.8 million by the Treasury the outstanding balance of Treasury bills decreased by €5.9 million to €334.19 million.

The yield resulting from the auction was 4.581 per cent, virtually unchanged from that on bills with a similar tenor issued on April 11, this year. The latest yield represented a bid price of 97.7365 per 100 nominal.

Today the Treasury will invite tenders for 90-day bills maturing on August 14. The following week the Treasury will invite tenders for 273-day bills maturing on February 20, 2009.

Treasury bill trading on the Malta Stock Exchange amounted to €3.84 million, with most trades being conducted by the Bank in its role as market maker.