On Thursday, September 15, the Governing Council of the ECB in coordination with the Federal Reserve, the Bank of England, the Bank of Japan and the Swiss National Bank decided to conduct three US dollar liquidity-providing operations with a maturity of approximately three months covering the period up to the end of the year.
The operations, to be conducted in addition to the ongoing weekly seven-day operations announced on May 10, 2010, are scheduled for October 12, 2011, November 9, 2011 and December 7, 2011. They will take the form of repurchase operations against eligible collateral and will be carried out as fixed rate tender procedures with full allotment.
ECB monetary operations
On Monday, September 12, the ECB announced its weekly Main Refinancing Operation (MRO). The auction was conducted on Tuesday, September 13, and attracted bids from euro area eligible counterparties of €163.77 billion, €48.36 billion higher than the amount bid for in the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 1.50 per cent, in accordance with current ECB policy.
On Tuesday, September 13, the ECB conducted a Special Term Refinancing Operation with a maturity of 28 days. This attracted bids of €54.22 billion which were allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 1.50 per cent, also in accordance with the current ECB policy. Also on September 13, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €143 billion. This operation is designed to sterilise the effect of purchases made under the Securities Markets Programme that were settled but had not yet matured by the previous Friday, September 9.
The auction was carried out at a variable rate, with euro area eligible counterparties allowed to place up to two bids at a maximum rate of 1.50 per cent. It attracted bids amounting to €187.68 billion, with the ECB allotting €143 billion or 76.19 per cent of the total amount bid for. The marginal rate on the auction was set at 1.06 per cent, with the weighted average rate at 1.01 per cent.
Furthermore, on Tuesday, September 13, being the last day of the reserve deposit maintenance period, the ECB conducted an overnight fine-tuning liquidity absorbing operation at a variable rate, with counterparties allowed to place up to two bids at a maximum rate of 1.50 per cent. The operation attracted bids of €167.76 billion, with the ECB accepting €166.96 billion or 99.52 per cent. The marginal rate on the operation was set at 1.30 per cent, while the weighted average rate was 1.27 per cent.
On Wednesday, September 14, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation attracted bids of $0.58 billion, which was allotted in full at a fixed rate of 1.10 per cent.
Domestic Treasury Bill market
In the domestic primary market for Treasury Bills, the Treasury invited tenders for 91-day bills maturing on December 16. Bids of €54.4 million were submitted for the 91-day bills, with the Treasury accepting €11.4 million. Since €8 million worth of bills matured during the week, the outstanding balance of Treasury Bills increased by €3.4 million, to stand at €320.15 million.
The yield from the 91-day bill auction was 1.360 per cent, i.e. 0.1 basis points higher than that on bills with a similar tenor issued on September 9, 2011, representing a bid price of 99.6574 per 100 nominal.
During the week under review, there was no trading on the Malta Stock Exchange.
Today, the Treasury will invite tenders for 91-day bills and 182-day bills, maturing on December 23, 2011 and March 23, 2012, respectively.