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Pakistan Money Market Review

Updated on Jul 10, 2000

The inter-bank market took a turnaround as the new financial year began. Overnight trading at 10.95% was only witnessed on Monday but towards the end of the week rates finally fell off to rock bottom levels of 0.50%. It has been since Sep 1999 that levels have fallen to such nadir levels of 0.25% and 0.50%. The money market had closed short to the tune of approximately Rs. 14 billion which was totally wiped out on the 3rd of July when the market opened. Inflows related to agriculture, national savings investments and were primarily responsible for the dearth of liquidity in the market. The OMO on Thursday did cause rates to rise marginally but even the acceptance of Rs. 2 billion by outright sale of T-Bills coupled with the OMO maturity outflow of Rs. 7.9 billion could not cause levels to rise back up.

The term market followed suit and offers fell off sharply across the board. The one month tenor which had been trading at around 9.50% soon saw as offers being quoted at around 7.50% and later fell off to 7.00%. Trades were reported with system-generated activity at 6.50% and also 6.25%. Three and six month trades were also witnessed in between the narrow band of 7.00% and 7.50%. Three month bids from the next week were available at 7.0% but offers were quoted at 7.20%. The announcement of the two way OMO did cause traders to anticipate an injection due to the outflow of Rs. 7.9 on Thursday. Contrary to expectations the authorities picked up Rs. 2 billion by outright selling T-Bills at 7.20%.

The bid pattern for the auction due next week would not be out of the ordinary. The market has also fallen off sharply from pre-July rates as the offers in the market suggest. In fact participation in the auction seems apparent at levels close to the last cut-offs if not lower. The presence of excess liquidity in the market could cause another desperation on part of the participants of the auction but chances of any forced reduction by the authorities in the T-Bill cut-off levels seem remote.

 

YIELD PROFILE

FEDERAL INVESTMENT BONDS

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THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year 07.65 08.25 10.00%
2 Year 08.50 09.00 10.75%
3 Year 09.00 09.50 12.25%
4 Year 09.25 09.75 13.00%
5 Year 09.75 10.00 13.50%
10 Year 10.00 10.50 14.50%

 


 

AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Jun 28 T-BILL Jun 28 Jun 29
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs. 1.000 Bln.

Rs. 2.136 Bln.

Rejected

 


 

MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill 07 Jul 2276.985 Mln
T-Bill 13 Jul 600 Mln
T-Bill 21 Jul 5,750 Mln
T-Bill 27 Jul 2250 Mln

 


 

REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight 00.75 10.95 02.51
1 Week 03.25 10.90 09.00
1 Month 06.50 09.65 10.25
3 Month 06.75 07.60 08.40
6 Month 07.15 07.50 08.50
1 Year 07.45 07.60 N.A.

 


 

TREASURY BILL RATES
MATURING THIS WEEK 1 WEEK AGO 1 YEAR AGO
1 Month 07.40 10.50 10.75
2 Month 07.25 09.00 09.25
3 Month 07.15 08.00 08.75
4 Month 07.15 08.00 08.75
5 Month 07.20 07.85 08.90