The central bank yesterday said it sold NT$30 billion (US$1.02 billion) of 91-day Treasury bills amid strong demand, with the interest rate reaching 0.8 percent, higher than any similar-maturity bills it sold last year and marking the highest level since 2006.
The rising interest rate on the latest offer of 91-day Treasury bills indicated yet another attempt by the central bank to absorb excess liquidity in the market in order to curb potential inflationary pressures, after the bank raised the overnight interbank interest rate to its highest level in three years.
The bid-to-cover ratio of the 91-day bills sale, an indication of demand, was 2.43 of bids totaling NT$72.9 billion, the central bank said in a statement.
The central bank handled the auction of Treasury bills on behalf of the Ministry of Finance to help meet short-term capital needs and repay debt.
Yesterday’s auction was the first sale of such instruments by the bank this year.
The bank last sold similar-maturity bills on Sept. 8 last year at 0.637 percent. That offer attracted bids for 2.62 times the amount of debt on offer, the bank’s data showed.
Last year, the bank also sold two such similar-maturity bills, with one sale in January at 0.411 percent interest and another one in April at 0.65 percent, data showed.
The central bank usually uses open market operations to adjust market liquidity on a regular basis.
Central bank Deputy Governor Yen Tzung-ta (嚴宗大) said the bank had been raising overnight interbank interest rates and issuing certificates of deposit to soak up market liquidity, local cable TV network UBN quoted him as saying yesterday.
Yen said the bank would continue to do so in a bid to reduce inflationary expectations among the public, UBN reported.
Yesterday, the overnight interbank interest rate was quoted at 0.493 percent, up 0.3 basis points from the previous close of 0.49 percent.
It was the latest in a series of highs since the rate hit a low of 0.095 percent on June 1, 2009, data showed.