. .



Pakistan Money Market Review

Updated on Sep 04, 2000

The past week the market witnessed outflows from the system on account of the export refinance and also due to the regular OMO conducted on Thursday. Earlier in the week, rates had remained volatile with activity between the band of 3.00% and 9.00%. However it was the liquidity crunch created due to the acceptance of Rs. 6.80 billion in the OMO that caused rates to cross into double digit levels. A tight money market had been on the cards for some time now and the outflows due to the continuous OMOs finally took their toll. This exercise and the much talked about export refinance outflows resulted in the market closing short. The magnitude of the discounting in the market was estimated at a maximum of around Rs.14 billion on Friday. The overnight market on Saturday maintained a similar trend with activity at 10.90% and 10.95% but rates for the one week fell off. One week offers fell from 10.75% to 10.25% with trades at 10.25% while two week bids and 8.25% and 8.75% but rates remained mismatched. This sudden change in the outlook for short term rates was primarily due to export refinance inflows.

The term market which has already reflected a rising interest rate trend was quick to react to the crunch in the money market. Quick trades were reported on the dealing system at 7.75% but later offers rose to 8.50% with bids as high as 8.25%. However the one month tenor fell off with offers available at 8.30% as rates for the two tenor came off. Longer tenors of three and six month maintained a firm stance throughout the week with offers touching 7.75% and 8.00%, respectively. Most of the brisk activity was witnessed on Saturday with banks willing to borrow for three and two months. Three month trades were witnessed at around 7.60% with offers marginally rising back to 7.75%. The regular OMO on Thursday continued to reflect the central bank's interest for funds, but only in tenor ranging from 2 weeks to 8 weeks. This two way OMO was identical to the Special OMO conducted on 26th August where a total amount of Rs. 4.4 billion was mopped from the system. The 4 week tenor continued to be a hot favourite for the participants where Rs. 6.60 billion was accepted at a relatively high cut-off of 8.00% while only Rs. 200 million was accepted for 8 weeks at 7.34%.

The auction scheduled next week would have a target amount of approximately Rs. 6.65 billion, keeping in mind the T-Bill maturity with the participation expected to be generally thin. Market news on the IMF guidelines, related to off loading of government papers held by SBP may have been the reason for accepting amounts in the OMOs at relatively higher levels but State Bank is certain to not welcome and to entertain banks bidding at levels driven by secondary market conditions. 

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

08.75

08.25

10.15%

2 Year

09.00

08.50

12.50%

3 Year

09.40

09.00

13.00%

4 Year

09.50

09.25

13.25%

5 Year

09.60

09.50

13.50%

10 Year

09.75

09.75

14.00%

.

.
AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Aug 23 T-BILL Aug 23  Aug 24
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.8,161 Bln

Rs.8,571 Bln

Rs.1.621 Bln
.

.
MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

07 Sep

6,650 Mln

T-Bill

21 Sep

1,108 Mln

T-Bill

27 Sep

2,000 Mln

.

.

REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Overnight

10.95

05.50

12.95

1 Week

10.25

06.00

12.75

1 Month

08.15

07.00

09.75

3 Month

07.60

07.15

09.00

6 Month

07.65

07.35

09.50

1 Year

08.60

07.90

N. A.

.

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

1 Month

09.15

07.75

10.25

2 Month

08.00

07.35

10.00

3 Month

07.80

07.40

09.50

4 Month

07.85

07.45

09.50

5 Month

07.85

07.50

09.75