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 |
|
