On Thursday, October 8, the Governing Council of the European Central Bank (ECB) decided to keep the interest rate on its main refinancing operations unchanged at one per cent. Interest rates on the marginal lending facility and the deposit facility were also left unchanged, at 1.75 per cent and 0.25 per cent, respectively.
On Monday, October 5, the ECB announced its weekly Main Refinancing Operation (MRO). This auction attracted bids for €62.62 billion from euro area eligible counterparties, €4.15 billion less than the amount bid for in the previous week. The bid 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.
On 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 the euro. This operation attracted bids for €6.94 billion, with all bids being allotted in full at a fixed price of -0.84 swap points.
On Tuesday, October 6, the ECB announced two supplementary long-term refinancing operations (LTROs), one with a maturity of 98 days and the other with a maturity of 182 days. These operations received bids for €1.13 billion and €2.37 billion, respectively, which amounts were allotted in full at a fixed rate equivalent to the ECB's main refinancing rate of one per cent in accordance with the current ECB policy.
Also on Tuesday, the ECB, in conjunction with the US Federal Reserve, conducted a 91-day US dollar funding operation through collateralised lending. This attracted bids for $1.01 billion, which amount was allotted in full at a fixed rate of 1.17 per cent. This operation, maturing on January 7, 2010, was the last operation providing US dollars for a three-month tenor following the recent Governing Council decision to discontinue such operations given the limited demand and the improved conditions in funding markets. These operations, as well as the other US dollar liquidity-providing operations that were previously discontinued, could be started again in the future if needed.
On Wednesday, October 7, the ECB, in conjunction with the US Federal Reserve, conducted a seven-day US dollar funding operation through collateralised lending. This attracted bids for $31.10 billion, which amount was allotted in full at a fixed rate of 1.14 per cent. The Governing Council of the ECB, in agreement with the Federal Reserve, decided to continue conducting one-week US dollar liquidity-providing operations until January 31, 2010, to support further improvements in the short-term US dollar funding markets.
In the domestic primary market for Treasury Bills, the Treasury invited tenders for 91-day bills maturing on January 8, 2010 and 182-day bills maturing on April 9, 2010. Bids for €24.59 million were submitted for the 91-day bills, with the Treasury accepting €24.31 million, while bids for €22.67 million were submitted for the 182-day bills, with the Treasury allotting the full amount. Since €53.73 million worth of bills matured during the week, the outstanding balance of Treasury Bills decreased by €6.75 million to €564.66 million. The yield resulting from the 91-day bill auction was 1.479 per cent, 2.2 basis points higher than that on bills with a similar tenor issued on September 11, 2009. The latest yield on such bills represented a bid price of 99.6275 per 100 nominal. The yield resulting from the 182-day bill auction was 1.622 per cent, i.e. 4.1 basis points higher than that on bills with a similar tenor issued on October 2, 2009. The yield on these bills represented a bid price of 99.1867 per 100 nominal.
Today, the Treasury will invite tenders for 91-day bills maturing on January 15, 2010.
In addition, €3.04 million worth of Treasury Bills were traded on the Malta Stock Exchange during the week, with all trades being conducted by the Central Bank of Malta in its role as market maker.