During the week under review, short-term excess liquidity continued to increase. This was mainly due to maturing term deposits amounting to Lm36 million, the government employees' salaries credited directly in their accounts with the banks amounting to Lm10.3 million and also favourable clearing of cheques amounting to Lm2.8 million.

On the other hand, banks withdrew Lm4.4 million in cash from the Central Bank and effected net purchases of treasury bills from the secondary market amounting to Lm3 million

However, these outflows have not mitigated this excess bank liquidity.

Consequently, the Central Bank of Malta invited tenders for a 14-day auction within the band of 3.95-4.00 per cent in order to absorb this short-term excess liquidity persisting in the banking system. Lm41 million was absorbed, representing a net absorption of Lm5 million.

As a result, outstanding term deposits increased to Lm92.5 million as compared to Lm87.5 million the previous week.

The weighted average rate resulting from this auction was 3.95 per cent, being the floor of the interest rate band at which the Central Bank conducts its weekly auctions for 14-day money.

As in the previous week, no inter-bank deals were transacted.

In the primary market for treasury bills, the government invited tenders for 91-days to mature on August 30. The amount applied for was Lm21.9 million, however, the Treasury issued Lm15 million, exactly the same amount of maturing treasury bills on the same day. Thus, outstanding treasury bills remained at Lm198.9 million.

The weighted average rate resulting from this auction was 4.0081 per cent, 0.0082 per cent higher than the previous rate. This rate corresponds to a price of Lm99.0106 per Lm100.

Today, the Treasury will invite tenders for 92-day treasury bills to mature on September 6, coinciding with a same day maturity of Lm12 million.

For the following week, the Treasury will receive applications for 181-days treasury bills at a price of not less than Lm97.9740 per Lm100 nominal, representing a yield of 4.1701 per cent. These bills will mature on December 12.

Turnover in the secondary market amounted to Lm13.1 million during the week under review as compared to Lm6.96 million transacted the previous week.

The Central Bank effected net purchases of Lm5.03 million while deals conducted outside the Central Bank amounted to Lm7.99 million.