On October 7, the Governing Council of the ECB decided to keep the interest rate unchanged at one per cent on its Main Refinancing Operations (MROs). Interest rates on the marginal lending and deposit facilities were also left unchanged, at 1.75 per cent and 0.25 per cent, respectively.
On October 4, the ECB announced its weekly MRO. The auction was conducted on October 5, and attracted bids from euro area eligible counterparties of €197.05 billion, €30.69 billion more than the amount bid for 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 current ECB policy.
On October 5, the ECB also conducted an auction for a seven-day, fixed-term deposit intended to absorb €63.5 billion.
The operation was designed to sterilise the effect of purchases made under the Securities Market Programme and settled by October 1. It was carried out at a variable rate with euro area eligible counterparties allowed to place up to two bids at a maximum rate of one per cent. The auction attracted bids of €114.18 billion and the ECB allotted the full intended volume of €63.5 billion, or 55.61 per cent of the total amount bid for. The marginal rate on the auction was set at 0.5 per cent, with the weighted average rate standing at 0.42 per cent.
On October 6, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This attracted bids of $0.06 billion, which was allotted in full at a fixed rate of 1.20 per cent.
Meanwhile, in the domestic primary market for Treasury Bills, the Treasury invited tenders for 28-day bills maturing on November 5, 2010, and for 182-day bills maturing on April 8, 2011. Bids amounting to €32.61 million were submitted for the 28-day bills, with the Treasury accepting €17 million, while bids for €72.05 million were submitted for the 182-day bills, with the Treasury accepting €27.05 million. Since €44.78 million worth of bills matured during the week, the outstanding balance of Treasury Bills decreased by €0.73 million, to stand at €467.89 million.
The yield from the 28-day bill auction was 0.685 per cent, i.e. 1.8 basis points lower than on bills with a similar tenor issued on October 1, representing a bid price of 99.9468 per 100 nominal. The yield from the 182-day bill auction was 1.169 per cent, i.e. 1.8 basis points lower than on bills with a similar tenor issued on August 6, representing a bid price of 99.4125 per 100 nominal.
During the week, Treasury Bill trading on the Malta Stock Exchange amounted to €2.65 million.
Today the Treasury will invite tenders for 28-day bills maturing on November 12, and 273-day bills maturing on July 15, 2011.