Pakistan Money Market Review
Updated on Sep 18, 2000
Interbank money market activity was witnessed at the
year's record low levels. Continuous inflows on account of export
refinance funds caused rate to remain under pressure. With the excess
liquidity in the market estimated in double digits, the outflow of Rs.
4.70 billion hardly caused the market to change direction. Overnight
trades were witnessed as low as 0.25% as desperate lenders continued to
place funds at available levels in the market. It was in July that the
overnight market had traded at levels of 0.50% and 0.75%. The crash of
overnight rates witnessed lenders covering in the one and two week
tenors at lows of 4.25% and 5.00% in the respective tenors. It was only
on Saturday that overnight rates rose to touch 1.50% and later to around
3.50% at the close of the day.
Term rates having already eased the previous week
continued to maintain a similar trend before sliding to low of 5.50%
while nominal amounts also changed hands at around 5.30%. This sudden
fall in rates can also be attributed to the acceptance of only Rs. 4.70
billion against an aggregate participation of approximately Rs.15
billion. Banks having generally bid in the one month tenor at the
previous cut-off of 8.00% or even higher, expecting the authorities to
mop up a significant amount, were probably left over with funds as SBP
brought the OMO cut-off down by 10 basis points to 7.90% while accepting
Rs. 3.30 billion. The other tenors of 1 and 2 week managed to pull out
Rs. 250 million and Rs.1.20 billion at 7.25% and 7.75%, respectively.
The longer tenors of three and six month which had touched highs of
7.50% and 7.65%, also fell off with nominal amounts changing hands.
Early in the week three month activity was witnessed at 7.40% while bids
and offers were hovering in the narrow band of 7.00% and 7.10%. Banks
have taken this opportunity in ease in term levels to cover their year
end as well. Activity was witnessed in the four month tenor at levels of
7.30% while, six month bids and offers also in the band of 7.35% and
7.45% with rates remaining mismatched.
It seems that the levels at which bids were accepted
by State Bank in the OMO are set to stay in the primary market, keeping
in mind a reduction of only 10 basis points. There is speculation that
the cutoff was marginally reduced in order to avoid an otherwise huge
acceptance and hence a tight market in it's wake. Secondary market
conditions have already reflected the bearish sentiment even with the
quarter end lurking just around the corner, mainly on account of an easy
short term market. But no key player is yet willing to bet on bill
yields coming off in the imminent auction, which is likely to see
feverish participation with the cut-off remaining relatively stable.
|
YIELD PROFILE |
FEDERAL INVESTMENT BONDS |
| . |
THIS
WEEK |
1
WEEK AGO |
1
YEAR AGO |
|
1 Year |
08.50 |
08.50 |
10.65% |
|
2 Year |
08.90 |
08.80 |
12.25% |
|
3 'feat |
09.40 |
09.20 |
13.00% |
|
4 Year |
09.80 |
09.50 |
13.25% |
|
S Year |
10.25 |
10.00 |
13.50% |
|
10 Year |
10.50 |
10.40 |
14.25% |
| AUCTIONS |
| BID
DATE |
INSTRUMENT |
RESULT |
SETTLEMENT |
| Sep
06 |
T-BILL |
Sep
06 |
Sep
07 |
| TARGET AMOUNT |
BID
AMOUNT |
ACCEPTED AMOUNT |
| Rs.6,650
Bln. |
Rs.4,342 Bln. |
Rs.267
Mln. |
| 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 |
03.50 |
01.00 |
10.75 |
|
1 Week |
04.75 |
05.50 |
09.00 |
|
1 Month |
06.15 |
06.75 |
08.75 |
|
3 Month |
07.15 |
07.30 |
09.15 |
|
6 Month |
07.40 |
07.45 |
10.25 |
|
1 Year |
05.25 |
08.50 |
N. A. |
| TREASURY
BILL RATES |
| MATURING |
THIS WEEK |
1 WEEK AGO |
1 YEAR AGO |
|
1 Month |
07.15 |
07.65 |
09.50 |
|
2 Month |
07.20 |
07.40 |
09.75 |
|
3 Month |
07.30 |
07.45 |
09.50 |
|
4 Month |
07.35 |
07.50 |
09.75 |
|
5 Month |
07.40 |
07.60 |
10.25 |
|
