Central Bank injects 1.6 billion euros in liquidity in Q1

TIRANA, Jan 20- Albania’s central bank injected a total of 227.4 billion lek (1.6 billion euros / USD2.1 billion) in first quarter of this year, mostly through one-week repo deals.
The Bank of Albania said in a statement it injected 211,3 billion lek through one-week repo deals in the first quarter of 2010.
In the January-March the Bank of Albania injected an average 17.49 billion lek a week in one-week reverse repo deals, an average 3 billion lek per auction in one-month and 4.3 billion lek per auction in three-month reverse repo deals.
The central bank also used one-day deposits to regulate daily liquidity by using 0.35 billion lek on average over the third quarter, compared to 0.54 billion lek in the previous quarter. It also used one-day credits once, injecting 10 million lek.
One-month reverse repos totaled 2 billion lek (22 million euros/USD 29 million) and was used only once at the beginning of January. Meanwhile, 13 billion lek was injected through three-month repos.
The central bank said it did not intervene in the domestic foreign exchange market in the third quarter.
During 2009, reverse repurchase agreement of one-week maturity was used as the main instrument of open market operations. Intervention by using this operation was conducted through fixed-price auction – the base rate of the Bank of Albania. This form of auction was launched in November 2008, as one of the measures taken to mitigate the tension induced in the banking system from deposit withdrawal. During the last quarter of 2009, market conditions were turned to normality and therefore it was decided to turn the main operation into the classic form – variable-price auction. The changed form of auction was decided to become effective in early 2010, but the decision for this change was made transparent to banks of the system at the beginning of the fourth quarter of 2009, according to the central bank’s annual report.