DUBAI, May 11 (Reuters) - Yields at Qatar's monthly Treasury bill auction edged down to a new low on Sunday, central bank data showed, as some of the OPEC member's banks remain awash with funds.
The yield on six-month T-bills fell to 0.89 percent, the lowest level since the central bank started to publish auction results in October 2012, from 0.92 percent last month.
On nine-month bills, the yield eased to 0.95 percent, also the lowest since October 2012, from 0.97 percent in April. The yield on the shortest, three-month notes rose to 0.72 percent from 0.68 percent in the previous monthly sale.
"A lot of Islamic banks are bidding aggressively as they seem to have a lot of liquidity," said a trader, who cannot be named under briefing rules. "(Overall) it (the market) is not very liquid or very tight. It is fairly distributed."
The central bank has conducted monthly auctions of 91-, 182- and 273-day T-bills since 2011, draining a fixed 4 billion riyals from the money market each time.
The demand of 10.1 billion riyals ($2.8 billion) at Sunday's auction was down from 12.6 billion riyals in April, data posted on the central bank's website (www.qcb.gov.qa) showed.
The International Monetary Fund has repeatedly urged the central bank to start managing liquidity fluctuations more finely, flexibly setting T-bill and T-bond issuance volumes.
A week ago, the IMF said in report that the money market volatility underscored a need to send clear signals to markets through a transparent and well structured liquidity management framework.
"The authorities saw some merit in this recommendation but did not see it as a short-term priority," the IMF said in the report after its annual consultations with Doha.
Doha may need more active management of money market liquidity in the coming years as the government and its firms plan to spend some $210 billion on building infrastructure ahead of the 2022 soccer World Cup, which is likely to push large amounts of money through the banking system.
Qatar's finance minister Ali Sherif al-Emadi told Reuters in December that volumes drained from the market through local currency debt issues might be changed flexibly in coming months, but he did not elaborate on how liquidity policy might become more sophisticated.
$1 = 3.64 Qatar Riyals Editing by Rosalind Russell