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Pakistan Money Market Review

Updated on Aug 14, 2000

Volatile conditions were witnessed the past week in the interbank. A T-Bill auction coupled with a Special OMO being the highlights. Even with these two primary market activities the authorities could only manage to accept an aggregate amount of Rs. 2.45 billion. Overnight rates on the other hand were unpredictable. Inflows to the tune of Rs. 17.09 billion could not manage to keep rates towards the lower end even after the acceptance of small amounts in the auction. The market after falling to 4.00% on Friday on account of the T-Bill maturity rose back sharply with the entire market caught on the back foot. The money market touched the 11.00% mark and registered a shortfall of Rs.16 billion, as reported in the press. Intrigued by this abrupt change in the market conditions, one week trades were conducted as high as 8.00%, before levels in this tenor fell back to 7.00% and further to 5.50% as the overnight crashed on Saturday with trades as low as 1.50%.

The T-Bill auction, anxiously watched by the interbank market, brought in a total bid amount of Rs. 9.325 billion against the target amount of Rs. 15.659 billion. As expected the State Bank, keeping the interest rates on T-Bills unchanged, accepted only Rs. 750 million with all bids for the three month paper being rejected. The cut-off level for the six month and one year papers being 7.38% and 7.96%, respectively. The term market reacted sharply to cutoff levels being maintained and the market looking excessively long, which was not the case to be. In the first instance one month offers, which had risen to as high as 7.50% prior to the OMO, fell to 6.25%, before rising on the news of the colossal discounting figure on Friday. Rates eased off considerably on Saturday with trades in the band of 6.50% and 7.00%. The three and six month remained restricted to within the 7.10% and 7.40% with trades for three months prior to the auction at 7.35%. Six month offers were available at 7.50% but bids remained scarce.

It now seems that the authorities are bent upon maintaining the interest rates on debt instruments at current cut-off levels. The market may yet again rise towards the next week as the regular OMO draws near, and also keeping in mind SBP's appetite for drawing liquidity from the market is still hovering in the market.

 

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

08.15

08.10

09.75%

2 Year

08.50

08.35

10.00%

3 Year

09.00

08.85

12.75%

4 Year

09.00

09.00

13.00%

5 Year

09.25

09.35

13.50%

10 Year

09.75

09.50

14.00%

 


 

AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Aug 09 T-BILL Aug 09  Aug 10
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs. 15,659Bln.

Rs.9,325 Bln.

Rs.750 Mln

 


 

MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

10 Aug

2,350 Mln

T-Bill

11 Aug

13,309Mln

T-Bill

24 Aug

1,600 Mln

T-Bill

26 Aug

6,360 Mln

 


 

REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

01.25

10.25

10.50

1 Week

05.25

08.63

10.00

I Month

06.50

07.50

06.50

3 Month

07.20

07.35

06.75

6 Month

07.35

07.38

07.15

1 Year

07.65

07.60

N. A.

 


 

TREASURY BILL RATES
MATURING THIS WEEK 1 WEEK AGO 1 YEAR AGO

1 Month

07.50

08.50

07.50

2 Month

07.20

07.65

07.15

3 Month

07.35

07.50

07.00

4 Month

07.40

07.50

07.25

5 Month

07.40

07.50

07.50