During the week under review, the banking system continued to experience excess short-term liquidity, mainly due to maturing term deposits amounting to Lm53 million, the sale of foreign currency against the Maltese lira to the Central Bank amounting to Lm7.4 million and Lm 11.1 million direct credits representing government employees' salaries, pensions and other social security benefits.

Accordingly, on Friday, the Central Bank of Malta invited tenders for a 14-day term deposit auction to absorb the excess short-term liquidity in the market. As a result, Lm22.5 million were absorbed at the weighted average rate of 3.95 per cent being the floor of the interest rate band of 3.95-4.05 per cent at which the Central Bank conducts its weekly auctions for 14-day money.

Following this, the amount of outstanding term deposits dropped to Lm62.5 million from Lm93 million of the previous week.

During the week under review, turnover in the inter-bank market amounted to Lm1 million as compared to Lm4 million in the previous week. Only one deal was transacted in 14-day money at the weighted average rate of four per cent, edging upwards from the previous weighted average rate of 3.98 per cent.

In the primary market for treasury bills, the government invited tenders for 91-day treasury bills, to mature on October 25. Applications amounted to Lm22.1 million, while the Treasury issued Lm18 million being the same amount maturing on the same day.

Consequently, the outstanding balance remained unchanged at Lm198.9 million.

The weighted average rate resulting from this auction was 4.0024 per cent, 135 basis points higher than the previous rate of 3.9889 per cent.

This week the Treasury will invite tenders for 91-day treasury bills to mature on November 1. For the following week, the Treasury will receive applications for 91-day treasury bills to mature on November 8.

During the week under review turnover in the secondary market amounted to Lm3.1 million of which Lm3 million were dealt outside the Central Bank of Malta.