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Pakistan Money Market Review

Updated on Nov 27, 2000

The short term trading band remained restricted to 12.90% to 13.00%, amidst dull trading. The net shortage in the system which in spite of an injection of Rs. 6.40 bln in the latest OMO, soared to Rs. 15.0 bin towards the end of the financial week. A part of the increase was due to reserve averaging but there have been genuine outflows on account of agricultural financing, which is putting the pressure on existing liquidity.

Dubious newspaper reports of an imminent cut in the CRR combined fueled market rumours instigated a lending spree in both the 3 and 6 month tenors. Moderate trades were reported in both these periods in the vicinity of 11.50% and 11.25%, respectively, 6 month money was also traded in the region of 11.00% from early next month. Banks having taken a proactive view in locking in their rates in comparatively long tenors, were further supported by a largely unexpected injection in the latest OMO. The State Bank opted to release 4 week funds into the market at the surprisingly low cut-off of 10.25% (this was at least 125 to 150 b.p.s below prevailing secondary market levels). But this did little in bringing the market off, as the net shortage was unaffected and in fact gradually swelled.

The State Bank through its OMO has managed to bring term repo levels off from last week's high, but the fact remains that the short term is still significantly short and the overnight quote has not budged from the 12.95% mark. With the advent of the month of Ramazan next week, Zakat deductions (albeit not immediately) will slowly tighten the system further. We do not expect any improvement in bill yields in the auction next week, but the tight short term outlook should keep levels in the 3 month and 6 month period from falling below current quotes.

 

YIELD PROFILE

FEDERAL INVESTMENT BONDS

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THIS WEEK

1 WEEK AGO

1 YEAR AGO

1 Year

12.35

12.25

11.50%

2 Year

12.80

13.00

12.25%

3 Year

13.50

13.50

13.00%

4 Year

13.75

13.75

13.25%

5 Year

14.25

14.00

13.75%

10 Year

15.00

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

12.50

1 Week

12.95

12.95

12.00

1 Month

12.25

12.50

10.50

3 Month

11.35

12.05

09.90

6 Month

11.20

11.95

10.00

1 Year

11.85

12.05

N.A




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

1 Month

13.25

13.50

11.50

2 Month

12.30

12.60

10.75

3 Month

11.75

12.25

10.25

4 Month

11.65

12.15

10.20

5 Month

11.60

12.00

10.10