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Pakistan Money Market Review

Updated on Nov 13, 2000

The interbank market remained firm throughout the week. The Open Market Operation, the primary market activity held every alternative week, was also rejected, thereby keeping the market liquidity status unchanged. The year end drawing nearer and also no ease in the liquidity crunch of the money market, rates rose up sharply in the short and medium term market. One and two week levels remained well around the 12.95% level with no ease expected. The shortfall in the market remained within the band of Rs 11-15 billion with banks continuously approaching the State Bank repo window for respite. The figure rose back on Friday, primarily due to the reserve averaging by banks

Term market activity was brisk with rates in all tenors registering a sharp rise on the other hand. Trades, in tenors ranging from forty-five days to three months, were the highlight of the week. Banks borrowed funds for forty-five days at levels between 12.25% and 12.40% Heavy lending was evident in this tenor while offers for two month remained initially at 12.25% but later rose to 12.50%. One month trades were scarce with lenders generally looking at 12.50% but later at 12.75%. With rates in the above mentioned tenors rising sharply, three month bids also rose from post auction levels of 11.30% and 11.50% to touch 12.00%. The spread of 100 b.p.s between the SBP six month T-bill auction cut-off (11.00%) and the three month secondary market repo rate being the widest since October did compel banks to place their funds at 12.00% Traded amounts were moderate and later bids eased off to 11.80%, in this tenor. The result of the OMO was not much of a surprise for the market. Bids were received on both sides, the repo and reverse repo / outright sale of T-bills, but a rejection appeared to be a certainty. A further drain from the market by way of selling T-bills and / or an inflow was not the case to be.

Dry and short conditions in the interbank market are expected to remain for some time now. The discounting figure of Rs 11-15 billion continues to be unaffected while unconfirmed rumors of outflows by way of agriculture payments abound, which is not helping the situation either. However, secondary market rates for three and six month are expected to ease off from the current 12.00% level, as the auction maturity of Rs 4.85 billion draws nearer.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

12.10

11.85

10.60%

2 Year

12.75

12.75

12.00%

3 Year

13.25

13.20

13.25%

4 Year

13.50

13.40

13.50%

5 Year

14.00

14.00

13.75%

10 Year

14.75

14.50

14.25%




AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Nov  01 T-BILL Nov 01 Nov 02
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs.23.415 Bln.

Rs.23.515 Bln.

Rs.13.850 Bln.



MATURITIES

INSTRUMENT

DATE

AMOUNT

T-Bill

02 Nov

23,390 Mln

T-Bill

16 Nov

4,850 Mln

T-Bill

30 Nov

1,850 Mln




REPO RATES

 

THIS WEEK

1 WEEK AGO

1 YEAR AGO

Oversight

12.95

12.95

06.00

1 Week

12.95

12.25

05.75

1 Month

12.55

12.10

07.65

3 Month

12.05

11.30

09.00

6 Month

12.00

11.25

09.60

1 Year

12.00

11.75

N. A.




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

1 Month

13.55

13.10

08.50

2 Month

12.65

12.00

09.25

3 Month

12.35

11.60

09.35

4 Month

12.30

11.65

09.45

5 Month

12.20

11.70

09.60