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Pakistan Money Market Review

Updated on Jul 31, 2000

The interbank market remained under pressure throughout the past week. The acceptance of Rs. 8.50 billion in the T-Bill auction did not bring about any major change with rates remaining unmoved. Overnight rates generally maintained a downward slide with trades in the initial parts of the week at 5.50%. Unconfirmed news of inflows also saw the short term rate sliding sharply with trades on Friday and Saturday as low as 1.50%. However some borrowers were caught by surprise as overnight offers rose back sharply towards the end on Saturday with trades as high as high as 7.50%.

The cut-off levels in the T-Bill auction were not brought down any further, as anticipated. In fact the State Bank, already under pressure by the surge in the interbank dollar rates, raised the cut-off levels by 22, 19, 36 b.p.s. for the 3, 6 month and the one year papers, respectively. Against a pre-auction target of Rs. 10.75 billion SBP accepted a total face value amount of Rs. 8.095 billion. The term market which had witnessed moderate activity in the three and six month tenors at 7.00% and 7.15%, during the week prior to the auction result, rose up sharply. Three and six month offers jumped upto 7.20% and 7.60%, respectively. The six month offers fell back with trades being reported at around 7.35% and 7.40%, while three month rates remained mismatched at 7.00% and 7.15%, respectively. One month rates volatile with the upsurge in the cut-off levels. Bids and offers in the band of 6.30% and 6.75% remained mismatched earlier in the week but later offers rose sharply to 7.50% while bids were available at 7.00%. Brisk activity was witnessed in one month call with activity conducted at 8.00% with offers later falling to 7.75%.

The T-bill auction has brought about a slight change in the interest rate policy of the present finance regime. However it is generally felt that this auction result is certainly not a trend maker. The market may have definitely seen the lowest of cut-off levels in prior auctions and we feel that interest rates on these government bonds will remain well within the 7.00% and 8.00% band.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

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THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year 07.75 07.75 09.00%
2 Year 08.50 08.50 09.00%
3 Year 09.00 09.00 13.25%
4 Year 09.25 09.25 13.25%
5 Year 09.50 09.50 13.50%
10 Year 10.00 10.00 14.00%

 


 

AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
July 26 T-BILL July 26 July 27
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs. 10,75 Bln.

Rs.9,145 Bill

Rs. 8,095 Bln.

 


 

MATURITIES

INSTRUMENT

DATE

AMOUNT

Instrument Date Amount
T-Bill 07 Jug 2,276 Mln
T-Bill 13 Jul 600 Mln
T-Bill 21 Jul 5,750 Mln
T-Bill 27 Jul 5,000 Mln

 


 

REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight 06.50 05.00 12.90
1 Week 05.88 07.50 06.50
1 Month 06.75 06.90 04.35
3 Month 06.85 07.00 05.65
6 Month 07.23 07.10 06.85
1 Year 07.53 07.45 N. A.

 


 

TREASURY BILL RATES
MATURING THIS WEEK 1 WEEK AGO 1 YEAR AGO
1 Month 07.35 07.50 05.75
2 Month 07.25 07.20 05.75
3 Month 07.20 07.15 06.10
4 Month 07.25 07.15 06.25
5 Month 07.30 07.20 06.50