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Money market report for the week ending December 23

ECB monetary operations

On Monday, December 19, the ECB announced its weekly Main Refinancing Operation (MRO). The auction was conducted on Tuesday, December 20, and attracted bids from euro area eligible counterparties of €169.02 billion, €122.61 billion lower 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 current ECB policy.

On Tuesday, December 20, in accordance with the press release issued on December 16, the ECB conducted a one-day Fine-tuning Liquidity Providing Operation.

The operation attracted bids of €141.93 billion which were also allotted in full at a fixed rate of one per cent.

Also on Tuesday, December 20, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €211 billion.

This operation was 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, December 16. The auction was carried out at a variable rate, with euro area eligible counterparties allowed to place up to four bids at a maximum rate of one per cent. It attracted bids amounting to €257.03 billion, with the ECB allotting €211 billion or 82.09 per cent of the total amount bid for. The marginal rate on the auction was set at 0.75 per cent, with the weighted average rate at 0.53 per cent.

On Wednesday, December 21, the ECB conducted a three-month Longer-Term Refinancing Operation (LTRO) to be settled as a fixed rate tender procedure with full allotment, with the rate fixed at the average rate of the MROs over the life of the operation. The auction attracted bids of €29.74 billion from euro area eligible counterparties, which amount was allotted in full, in accordance with current ECB policy.

On the same day, in accordance with the Governing Council’s decision of December 8, the ECB conducted a three-year LTRO, to be settled as a fixed rate tender procedure with full allotment, with the rate fixed at the average rate of the MROs over the life of the operation. The auction attracted bids of €489.19 billion from euro area eligible counterparties, which amount was allotted in full, in accordance with current ECB policy.

Furthermore, on Wednesday, December 21, the ECB conducted a 14-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation attracted bids of $33 billion, which were allotted in full at a fixed rate of 0.57 per cent.

Domestic Treasury Bill market

In the domestic primary market for Treasury Bills, the Treasury invited tenders for 91-day bills maturing on March 23, 2012. Bids of €38.8 million were submitted for the bills, with the Treasury accepting only €0.55 million. Since €12.75 million worth of bills matured during the week, the outstanding balance of Treasury Bills decreased by €12.20 million, to stand at €258.90 million.

The yield from the 91-day bill auction was 0.899 per cent, i.e. 29.8 basis points lower than that on bills with a similar tenor issued on December 16, representing a bid price of 99.7733 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 181-day bills maturing on March 30, 2012 and June 28, 2012, respectively.

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