On Monday, January 25, the European Central Bank announced its weekly Main Refinancing Operation.
This auction, which was conducted on Tuesday, attracted bids for €63.44 billion from euro area eligible counterparties, €5.42 billion more 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.
As announced in a press release dated January 18, on Monday, January 25, the Eurosystem and the Swiss National Bank (SNB) conducted the last EUR/CHF foreign exchange swap, with a seven-day maturity, to provide Swiss franc liquidity against euro. This operation attracted bids for €585 million, and since this was well below the intended amount of €25 billion, all bids were allotted in full at a fixed price of - 0.38 swap points.
On Tuesday, January 26, the ECB announced a standard Longer-Term Refinancing Operation with a maturity of 91 days. In this LTRO, the ECB received bids for €3.27 billion, which amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of one per cent.
In a press release dated January 27, the Governing Council of the ECB announced that, in agreement with the US Federal Reserve, the Bank of England, the Bank of Japan and the SNB, it had decided to stop conducting US dollar liquidity-providing operations after January 31. In the light of this decision, the ECB also confirmed that its temporary liquidity swap lines with the Federal Reserve would expire on February 1, 2010. It said that, given the improvements in the functioning of financial markets over the past year, these arrangements, which had been established to counter pressures in global funding markets, were no longer needed. However, central banks would continue to cooperate amongst themselves as and when the need arose. Thus, on Wednesday, January 27, the ECB, in conjunction with the US Federal Reserve, conducted its last seven-day US dollar funding operation through collateralised lending. This operation, which was conducted at a fixed rate of 1.13 per cent, attracted no bids.
In the domestic primary market for Treasury Bills, the Treasury invited tenders for 91-day bills maturing on April 30, 2010. Bids for €128.91 million were submitted, with the Treasury allotting €20 million. Since €6.10 million worth of bills matured during the week, the outstanding balance of Treasury Bills increased by €13.91 million to €465.01 million.
The yield resulting from the auction was 1.204 per cent, i.e. 6.7 basis points less than that on bills with a similar tenor issued on January 22. The latest yield represented a bid price of 99.6966 per 100 nominal.
This week the Treasury will invite tenders for 182-day bills maturing on August 6.
Treasury Bill trading on the Malta Stock Exchange amounted to €1.37 million during the week, with €0.04 million trades being conducted by the Central Bank of Malta in its role as market maker. Concurrently off-exchange transactions amounted to €3.41 million, with €2.14 million trades being transacted by the Central Bank of Malta.