Money market report for the week ended February 7

On Thursday, February 6, the Governing Council of the European Central Bank decided to keep the interest rate on the main refinancing operations (MRO) unchanged at 0.25 per cent. Interest rates on the marginal lending facility and on the deposit facility were also left unchanged at 0.75 per cent and zero per cent, respectively.

ECB monetary operations

On Monday, February 3, the ECB announced its weekly MRO. The auction was conducted on Tuesday, February 4, and attracted bids from euro area eligible counterparties of €95.15 billion, €20.49 billion lower than the bid amount of the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing MRO rate of 0.25 per cent, in accordance with current ECB policy.

Also on February 4, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €175.5 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, January 31. 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 0.25 per cent. It attracted bids amounting to €211.02 billion, with the ECB allotting €175.5 billion, or 83.17 per cent of the total bid amount. The marginal rate on the auction was set at 0.25 per cent, with the weighted average rate at 0.23 per cent.

On Wednesday, February 5, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation was carried out at a fixed rate of 0.58 per cent and did not attract bids from euro area eligible counterparties.

In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day and 182-day bills maturing on May 9 and August 8, respectively. Bids of €28 million were submitted for the 91-day bills, with the Treasury accepting €19.0 million, while bids of €39.0 million were submitted for the 182-day bills, with the Treasury accepting €27.0 million. Since €1 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €45.0 million, to stand at €330.67 million.

The yield from the 91-day bill auction was 0.362 per cent, i.e. 4.5 basis points higher than on bills with a similar tenor issued on January 24, representing a bid price of 99.9086 per 100 nominal. The yield from the 182-day bill auction was 0.636 per cent, i.e. 9.2 basis points higher than on bills with a similar tenor issued on January 31, representing a bid price of 99.6795 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 and 181-day bills maturing on May 16 and August 14 respectively

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