On Monday, September 21, the European Central Bank (ECB) announced its weekly Main Refinancing Operation (MRO).

This auction, which was conducted last Tuesday, attracted bids for €85 billion from euro area eligible counterparties, which amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of one per cent in accordance with the current ECB policy.

The same day, the Eurosystem and the Swiss National Bank (SNB) conducted a EUR/CHF foreign exchange swap, with a seven-day maturity, to provide Swiss franc liquidity against euro.

This operation attracted bids for €8.34 billion, with all bids being allotted in full at a fixed price of -0.81 swap points.

On Wednesday, September 23, the ECB, in conjunction with the US Federal Reserve, conducted a seven-day US dollar funding operation through collateralised lending.

This attracted bids for $40.02 billion, which amount was allotted in full at a fixed rate of 1.16 per cent.

In a press release dated September 24, the Governing Council of the ECB announced its decision, in agreement with the Swiss National Bank, to continue conducting one-week Swiss franc liquidity-providing swap operations until January 31, 2010 to support further improvements in the short-term Swiss franc funding markets.

The Governing Council of the ECB has also decided, in agreement with other central banks, including the US Federal Reserve, to continue conducting US dollar liquidity-providing operations from October 2009 to January 2010.

These Eurosystem operations will continue to take the form of seven-day repurchase operations against ECB eligible collateral and to be carried out as fixed rate tenders with full allotment. Given the limited demand and the improved conditions in funding markets, the US dollar operations with a term of 84 days will be discontinued following the operation to be held on October 6, 2009 and maturing on January 7, 2010.

The 84-day operations, as well as the other US dollar liquidity-providing operations that were previously discontinued, could be started again in the future if needed.

In the domestic primary market for Treasury Bills, the Treasury invited tenders for 273-day bills maturing on June 25, 2010. Bids for €56.87 million were submitted, with the Treasury allotting €35.62 million. Since €32.96 million worth of bills matured during the week, the outstanding balance of Treasury Bills increased by €2.67 million to €559.75 million.

The yield resulting from the auction was 1.6 per cent, i.e. 3.9 basis points lower than that on bills with a similar tenor issued on August 28, 2009. The latest yield represented a bid price of 98.8012 per 100 nominal.

Today the Treasury will invite tenders for 181-day bills maturing on April 1, 2010.

Treasury Bill trading on the Malta Stock Exchange amounted to €2.85 million during the week, with all trades being conducted by the Central Bank of Malta in its role as market maker. Off-exchange transactions amounted to €0.08 million.

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