MOF raised $59M in the Treasury Bills Auction held on November 26, 2020

MOF raised $59M in the Treasury Bills Auction held on November 26, 2020

BDL’s latest statistics on money supply revealed that Broad Money (M3) decreased by a weekly LBP 153B ($101M) in the week ending November 26, 2020 to stand at LBP 197,536B ($131B). As such, on an annual basis, M3 decreased by 4.14% and 2.44% since year-start (YTD).

In details, M1 expanded by a weekly LBP 148B ($98M) to settle at LBP 36,367B ($24.12B) by November 26, 2020. The uptick is mainly attributed to the weekly increase in Currency in circulation by LBP 229B ($152M). Meanwhile, demand deposits decreased weekly by LBP 81B ($53.7M).

In turn, total deposits (excluding Demand deposits) increased by LBP 4.48B ($2.97M), owing to a weekly rise in deposits denominated in foreign currencies by USD 97M. In addition, Terms and saving deposits in LBP witnessed a weekly drop by LBP 142B ($94.2M).

As such, the rate of broad money dollarization rose as it went from 67.32% in the week ending November 19 to 67.34% in the week ending November 26, 2020.

Analytically, the money supply M3 can be derived from combining the balance sheet of BDL with the balance sheet of banks to arrive at the monetary survey of the banking system. The resulting M3 would be equal to the sum of: net foreign assets (NFA), credit to the private sector (CPS), net credit to the public sector (NCPS), and other items net (OIN). Latest data show that in October 2020, M3 stood at $131.04B, less by 2.44% from year-start (YTD); NFA was $18.45B, less 30.58% YTD; CPS was $36.09B, less by 23.17%; NCPS was $39.82B, less by 15.84%; and OIN was $36.84B, higher by 142.75%, and comprising mostly (in BDL’s terminology) other assets which include open market operations and seigniorage, considered to be a controversial account by some.

In its treasury bills (T-Bills) auction dating November 26, 2020, the Ministry of Finance (MoF) raised LBP 88.1B ($58.44M) through the issuance of T-Bills maturing in 3 months (3M) and 1 year (1Y) and notes maturing in 5 year (5Y). The highest demand was recorded on the 5Y notes which grasped 79.8% of total subscriptions, while 1Y T-bills and 3M T-bills accounted for the remaining shares of 12.33% and 7.88%, respectively. In details, the yields on 3M and 1Y stood at 3.5% and 4.5% while coupon rate on the 5Y stood at 6%.

Source: BDL; MoF

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