Money market report for week ended July 6

ECB decisions

On Thursday, July 5, the Governing Council of the European Central Bank (ECB) reduced the rate on its Main Refinancing Operations (MRO) by 25 basis points to 0.75 per cent with effect from Wednesday, July 11. Also, with effect from the same date, the ECB reduced the rate on the marginal lending facility and on the overnight deposit facility by 25 basis points to 1.50 per cent and 0 per cent, respectively.

ECB monetary operations

On Monday, July 2, the ECB announced its weekly MRO. The auction was conducted on Tuesday, July 3, and attracted bids from euro area eligible counterparties of €163.63 billion, €16.75 billion lower than the bid amount in the previous week. The 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, July 3, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €210.5 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, June 29.

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 €398.08 billion, with the ECB allotting €210.5 billion, or 52.88 per cent of the total bid amount. The marginal rate on the auction was set at 0.26 per cent, with the weighted average rate at 0.26 per cent.

Also on Tuesday, July 3, 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 $4.30 billion, which was allotted in full at a fixed rate of 0.68 per cent.

Domestic Treasury bill market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day and 182-day bills maturing on October 5, and January 4, 2013, respectively.

Bids of €8 million were submitted for both the 91-day bills and the 182-day bills, with the Treasury accepting €8 million and €5 million respectively. Since €28.25 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €15.25 million, to stand at €240.80 million.

The yield from the 91-day bill auction was 1.065 per cent, i.e. 2.5 basis points higher than that on bills with a similar tenor issued on June 28, representing a bid price of 99.7315 per 100 nominal.

The yield from the 182-day bill auction was 1.204 per cent, i.e. 1.4 basis points higher than that on bills with a similar tenor issued on June 28, representing a bid price of 99.3950 per 100 nominal.

During the week under review, there was no trading on the Malta Stock Exchange.

Today, the Treasury will invite tenders for 28-day bills, 91-day bills and 182-day bills maturing on August 10, October 12 and January 11, 2013, respectively.


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