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Pakistan Money Market Review

Updated on Nov 20, 2000

The market refused to budge this week. The net shortage in the system, which soared to approximately Rs. 15.0 bln towards the end of the week, kept chances of levels coming off in the near future, very much at bay. The overnight and short term scene remained dull and listless on account of the bullish lopsidedness.

Moderate activity in term repos was noted this week. Banks running heavy shortages, took to borrowing money in the 3 month period. Activity in this tenor was conducted within the band of 12.20% to 12.35%. But levels in the wake of this trading interest, took a slight dip with trading volumes being thin. Towards the weekend, offers of 3 and 6 month money were available at 12.25% and 12.00%, respectively. Bidding interest in both these periods is currently stagnant at 11.90% and 11.75%, respectively. Overall volumes are likely to remain thin, following the rise in the net discounting figure towards the end of the week. With major lenders showing no signs of compromising and bidders biding their time and fearing to hedge themselves at interest rate peaks, activity has taken a hit.

The State Bank in the latest auction settlement kept the acceptance at a paltry Rs. 450.0 mln at 10.95% (w.a.y. of 10.95%) in the 6 month paper. It is important to note that the bids accepted were only two and both of them were client based. There were comparatively large bids in the range of 11.50% to 11.75% (which were 25 to 50 b.p.s. below the secondary market quotes), for the 6 month paper, but the SBP refused to be tempted in to providing a higher cut-off. There is a general sense of hesitancy among traders and most of them are awaiting the SBP final announcement of the selected Primary Dealers, and hence the introduction of the new bonds. Questions such as whether or not the central bank will reduce the CRR in order encourage participation in the auctions for these new instruments, or whether or not the SBP will continue its tight monetary policy and defend the rupee; are enough to give any trader sleepless nights. But there is one surety that corporate clients are hungry for the introduction of these instruments. This was evident from the level of client based participation (below market based rates) in this week's auction.

YIELD PROFILE

FEDERAL INVESTMENT BONDS

.

THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

12.25

12.10

11.50%

2 Year

13.00

12.75

12.25%

3 Year

13.50

13.25

13.00%

4 Year

13.75

13.50

13.25%

5 Year

14.00

14.00

13.75%

10 Year

14.75

14.75

14.50%




AUCTIONS
BID DATE INSTRUMENT RESULT SETTLEMENT
Nov  15 T-BILL Nov 15 Nov 16
TARGET AMOUNT BID AMOUNT ACCEPTED AMOUNT
Rs. 4.850 Bln

Rs. 5.291 Bln.

Rs. 450 Mln



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

Overnight

12.95

12.95

09.50

1 Week

12.95

12.95

07.50

1 Month

12.50

12.55

06.80

3 Month

12.05

12.05

08.70

6 Month

11.95

12.00

09.50

1 Year

12.05

12.00

N. A.




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

1 Month

13.50

13.55

07.40

2 Month

12.60

12.65

08.80

3 Month

12.25

12.35

09.00

4 Month

12.15

12.30

09.20

5 Month

12.00

12.20

09.50